Shareholders in China Merchants Shekou Industrial Zone Holdings (SZSE:001979) are in the red if they invested five years ago

China Merchants Shekou Industrial Zone Holdings Co., Ltd. (SZSE:001979) shareholders should be happy to see the share price up 25% in the last quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 41%, which falls well short of the return you could get by buying an index fund.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for China Merchants Shekou Industrial Zone Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Looking back five years, both China Merchants Shekou Industrial Zone Holdings' share price and EPS declined; the latter at a rate of 19% per year. The share price decline of 10% per year isn't as bad as the EPS decline. So the market may previously have expected a drop, or else it expects the situation will improve.

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

Dive deeper into China Merchants Shekou Industrial Zone Holdings' key metrics by checking this interactive graph of China Merchants Shekou Industrial Zone Holdings'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. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of China Merchants Shekou Industrial Zone Holdings, it has a TSR of -28% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that China Merchants Shekou Industrial Zone Holdings shareholders have received a total shareholder return of 5.3% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 5% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand China Merchants Shekou Industrial Zone Holdings better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for China Merchants Shekou Industrial Zone Holdings you should be aware of, and 1 of them is potentially serious.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are 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.