Despite lower earnings than three years ago, Kailuan Energy ChemicalLtd (SHSE:600997) investors are up 3.5% since then

No-one enjoys it when they lose money on a stock. But no-one can make money on every call, especially in a declining market. The Kailuan Energy Chemical Co.,Ltd. (SHSE:600997) is down 14% over three years, but the total shareholder return is 3.5% once you include the dividend. And that total return actually beats the market decline of 27%. The share price has dropped 24% in three months.

If the past week is anything to go by, investor sentiment for Kailuan Energy ChemicalLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Kailuan Energy ChemicalLtd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

Kailuan Energy ChemicalLtd saw its EPS decline at a compound rate of 13% per year, over the last three years. In comparison the 5% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

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

Dive deeper into Kailuan Energy ChemicalLtd's key metrics by checking this interactive graph of Kailuan Energy ChemicalLtd's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Kailuan Energy ChemicalLtd, it has a TSR of 3.5% 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

We're pleased to report that Kailuan Energy ChemicalLtd shareholders have received a total shareholder return of 8.6% over one year. And that does include the dividend. That's better than the annualised return of 7% 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 Kailuan Energy ChemicalLtd better, we need to consider many other factors. Even so, be aware that Kailuan Energy ChemicalLtd is showing 2 warning signs in our investment analysis , you should know about...

We will like Kailuan Energy ChemicalLtd 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com