Beijing Advanced Digital Technology (SZSE:300541) sheds 16% this week, as yearly returns fall more in line with earnings growth

It's been a soft week for Beijing Advanced Digital Technology Co., Ltd (SZSE:300541) shares, which are down 16%. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 24%, less than the market return of 33%.

Although Beijing Advanced Digital Technology has shed CN¥1.0b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

See our latest analysis for Beijing Advanced Digital Technology

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During five years of share price growth, Beijing Advanced Digital Technology achieved compound earnings per share (EPS) growth of 4.3% per year. That makes the EPS growth particularly close to the yearly share price growth of 4%. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Indeed, it would appear the share price is reacting to the EPS.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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 Beijing Advanced Digital Technology, it has a TSR of 28% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Beijing Advanced Digital Technology shareholders are down 14% for the year (even including dividends), but the market itself is up 6.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Beijing Advanced Digital Technology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Beijing Advanced Digital Technology (of which 1 is a bit concerning!) you should know about.

Of course Beijing Advanced Digital Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.