COSCO SHIPPING Development (HKG:2866) sheds 11% this week, as yearly returns fall more in line with earnings growth

It's been a soft week for COSCO SHIPPING Development Co., Ltd. (HKG:2866) shares, which are down 11%. Looking on the brighter side, the stock is actually up over twelve months. But to be blunt its return of 11% fall short of what you could have got from an index fund (around 40%).

While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

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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.

COSCO SHIPPING Development was able to grow EPS by 8.6% in the last twelve months. This EPS growth is significantly lower than the 11% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, COSCO SHIPPING Development's TSR for the last 1 year was 16%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

COSCO SHIPPING Development provided a TSR of 16% over the last twelve months. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 9% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand COSCO SHIPPING Development better, we need to consider many other factors. For instance, we've identified 3 warning signs for COSCO SHIPPING Development (2 are significant) that you should be aware of.

We will like COSCO SHIPPING Development 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 Hong Kong 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.