How Much Did Postal Savings Bank of China's(HKG:1658) Shareholders Earn From Share Price Movements Over The Last Year?

While not a mind-blowing move, it is good to see that the Postal Savings Bank of China Co., Ltd. (HKG:1658) share price has gained 25% in the last three months. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 20% in a year, falling short of the returns you could get by investing in an index fund.

Check out our latest analysis for Postal Savings Bank of China

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.

Unhappily, Postal Savings Bank of China had to report a 6.4% decline in EPS over the last year. The share price decline of 20% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The P/E ratio of 5.45 also points to the negative market sentiment.

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

Dive deeper into Postal Savings Bank of China's key metrics by checking this interactive graph of Postal Savings Bank of China's earnings, revenue and cash flow.

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 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. We note that for Postal Savings Bank of China the TSR over the last year was -16%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

The last twelve months weren't great for Postal Savings Bank of China shares, which cost holders 16%, including dividends, while the market was up about 9.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 7% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Postal Savings Bank of China is showing 2 warning signs in our investment analysis , you should know about...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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This article by Simply Wall St is general in nature. 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.
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