Guangzhou Tinci Materials Technology's (SZSE:002709) 17% CAGR outpaced the company's earnings growth over the same five-year period

It hasn't been the best quarter for Guangzhou Tinci Materials Technology Co., Ltd. (SZSE:002709) shareholders, since the share price has fallen 14% in that time. But in stark contrast, the returns over the last half decade have impressed. Indeed, the share price is up an impressive 110% in that time. Generally speaking the long term returns will give you a better idea of business quality than short periods can. The more important question is whether the stock is too cheap or too expensive today. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 57% decline over the last three years: that's a long time to wait for profits.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

View our latest analysis for Guangzhou Tinci Materials Technology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Guangzhou Tinci Materials Technology achieved compound earnings per share (EPS) growth of 44% per year. This EPS growth is higher than the 16% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. Having said that, the market is still optimistic, given the P/E ratio of 76.09.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

This free interactive report on Guangzhou Tinci Materials Technology's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. We note that for Guangzhou Tinci Materials Technology the TSR over the last 5 years was 118%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Guangzhou Tinci Materials Technology shareholders gained a total return of 4.7% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 17% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Guangzhou Tinci Materials Technology better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Guangzhou Tinci Materials Technology (including 1 which is potentially serious) .

We will like Guangzhou Tinci Materials Technology 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.