Optimism around Chow Tai Seng Jewellery (SZSE:002867) delivering new earnings growth may be shrinking as stock declines 3.2% this past week

Chow Tai Seng Jewellery Co., Ltd. (SZSE:002867) shareholders should be happy to see the share price up 17% in the last quarter. It's not great that the stock is down over the last three years. But that's not so bad when you consider its market is down 15%.

After losing 3.2% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Chow Tai Seng Jewellery

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years that the share price fell, Chow Tai Seng Jewellery's earnings per share (EPS) dropped by 5.9% each year. This change in EPS is reasonably close to the 7% average annual decrease in the share price. So it seems like sentiment towards the stock hasn't changed all that much over time. In this case, it seems that the EPS is guiding the share price.

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

It might be well worthwhile taking a look at our free report on Chow Tai Seng Jewellery's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Chow Tai Seng Jewellery, it has a TSR of -5.8% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Chow Tai Seng Jewellery shareholders gained a total return of 1.0% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 6% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Chow Tai Seng Jewellery better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Chow Tai Seng Jewellery you should be aware of.

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 Chinese exchanges.

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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.