Should Yuexiu Transport Infrastructure (HKG:1052) Be Disappointed With Their 46% Profit?

Stock pickers are generally looking for stocks that will outperform the broader market. And in our experience, buying the right stocks can give your wealth a significant boost. To wit, the Yuexiu Transport Infrastructure share price has climbed 46% in five years, easily topping the market return of 0.7% (ignoring dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 25% in the last year , including dividends .

View 2 warning signs we detected for Yuexiu Transport Infrastructure

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

During five years of share price growth, Yuexiu Transport Infrastructure achieved compound earnings per share (EPS) growth of 16% per year. This EPS growth is higher than the 7.8% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days. The reasonably low P/E ratio of 8.54 also suggests market apprehension.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

SEHK:1052 Past and Future Earnings, December 30th 2019
SEHK:1052 Past and Future Earnings, December 30th 2019

Fundamentally, investors are buying a company’s future earnings, but the stability of the business can influence the price they’re willing to pay. For example, we’ve discovered 2 warning signs for Yuexiu Transport Infrastructure which any shareholder or potential investor should be aware of.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Yuexiu Transport Infrastructure’s TSR for the last 5 years was 96%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It’s good to see that Yuexiu Transport Infrastructure has rewarded shareholders with a total shareholder return of 25% in the last twelve months. That’s including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 14% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before forming an opinion on Yuexiu Transport Infrastructure you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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. Thank you for reading.