Founder Securities (SHSE:601901) shareholders have earned a 7.0% CAGR over the last three years

It hasn't been the best quarter for Founder Securities Co., Ltd. (SHSE:601901) shareholders, since the share price has fallen 11% in that time. But that doesn't change the fact that the returns over the last three years have been pleasing. After all, the share price is up a market-beating 20% in that time.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

See our latest analysis for Founder Securities

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 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).

Founder Securities was able to grow its EPS at 14% per year over three years, sending the share price higher. The average annual share price increase of 6% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on Founder Securities' earnings, revenue and cash flow.

A Different Perspective

Founder Securities shareholders gained a total return of 7.4% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 1.1% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Founder Securities better, we need to consider many other factors. For instance, we've identified 1 warning sign for Founder Securities that you should be aware of.

We will like Founder Securities 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.

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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.