Stock Analysis

Tongling Jingda Special Magnet Wire's (SHSE:600577) five-year earnings growth trails the impressive shareholder returns

SHSE:600577
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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. For instance, the price of Tongling Jingda Special Magnet Wire Co., Ltd. (SHSE:600577) stock is up an impressive 195% over the last five years. Also pleasing for shareholders was the 93% gain in the last three months.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Tongling Jingda Special Magnet Wire

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, Tongling Jingda Special Magnet Wire achieved compound earnings per share (EPS) growth of 6.0% per year. This EPS growth is lower than the 24% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
SHSE:600577 Earnings Per Share Growth December 20th 2024

We know that Tongling Jingda Special Magnet Wire has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Tongling Jingda Special Magnet Wire will grow revenue in the future.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Tongling Jingda Special Magnet Wire, it has a TSR of 231% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Tongling Jingda Special Magnet Wire shareholders have received a total shareholder return of 106% over one year. And that does include the dividend. That's better than the annualised return of 27% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Tongling Jingda Special Magnet Wire better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Tongling Jingda Special Magnet Wire (including 1 which makes us a bit uncomfortable) .

We will like Tongling Jingda Special Magnet Wire better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 Chinese exchanges.

Valuation is complex, but we're here to simplify it.

Discover if Tongling Jingda Special Magnet Wire might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.