The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the China YuHua Education Corporation Limited (HKG:6169) share price is down 24% in the last year. That contrasts poorly with the market return of -6.6%. China YuHua Education hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the unfortunate twelve months during which the China YuHua Education share price fell, it actually saw its earnings per share (EPS) improve by 37%. It could be that the share price was previously over-hyped. It’s fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.
China YuHua Education’s revenue is actually up 41% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
China YuHua Education is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling China YuHua Education stock, you should check out this free report showing analyst consensus estimates for future profits.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for China YuHua Education the TSR over the last year was -22%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
China YuHua Education shareholders are down 22% for the year (even including dividends), even worse than the market loss of 6.6%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. It’s great to see a nice little 5.5% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Before forming an opinion on China YuHua Education you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
We will like China YuHua Education better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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 firstname.lastname@example.org. 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.