The 42% return delivered to Singamas Container Holdings' (HKG:716) shareholders actually lagged YoY earnings growth

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Singamas Container Holdings Limited (HKG:716) share price is up 30% in the last 1 year, clearly besting the market return of around 19% (not including dividends). That's a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 20% lower than it was three years ago.

Since the stock has added HK$167m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Singamas Container Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last year Singamas Container Holdings grew its earnings per share (EPS) by 49%. This EPS growth is significantly higher than the 30% increase in the share price. So it seems like the market has cooled on Singamas Container Holdings, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.33.

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

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Singamas Container Holdings' 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Singamas Container Holdings' TSR for the last 1 year was 42%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Singamas Container Holdings has rewarded shareholders with a total shareholder return of 42% in the last twelve months. And that does include the dividend. That gain is better than the annual TSR over five years, which is 21%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Singamas Container Holdings better, we need to consider many other factors. Take risks, for example - Singamas Container Holdings has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

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.