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The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Guangdong Adway Construction (Group) Holdings Company Limited (HKG:6189) share price is 11% higher than it was a year ago, much better than the market return of around -4.7% (not including dividends) in the same period. That's a solid performance by our standards! Guangdong Adway Construction (Group) Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Guangdong Adway Construction (Group) Holdings was able to grow EPS by 12% in the last twelve months. This EPS growth is reasonably close to the 11% increase in the share price. So this implies that investor expectations of the company have remained pretty steady. It makes intuitive sense that the share price and EPS would grow at similar rates.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Guangdong Adway Construction (Group) Holdings's earnings, revenue and cash flow.
A Different Perspective
Guangdong Adway Construction (Group) Holdings shareholders should be happy with the total gain of 11% over the last twelve months. And the share price momentum remains respectable, with a gain of 9.5% in the last three months. This suggests the company is continuing to win over new investors. Before forming an opinion on Guangdong Adway Construction (Group) Holdings you might want to consider these 3 valuation metrics.
Of course Guangdong Adway Construction (Group) Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.