How Much Did Datang Environment Industry Group's(HKG:1272) Shareholders Earn From Share Price Movements Over The Last Three Years?

While it may not be enough for some shareholders, we think it is good to see the Datang Environment Industry Group Co., Ltd. (HKG:1272) share price up 19% in a single quarter. But that is small recompense for the exasperating returns over three years. Regrettably, the share price slid 65% in that period. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

Check out our latest analysis for Datang Environment Industry Group

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the three years that the share price fell, Datang Environment Industry Group's earnings per share (EPS) dropped by 41% each year. This fall in the EPS is worse than the 30% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Datang Environment Industry Group'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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Datang Environment Industry Group's TSR for the last 3 years was -59%, 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

Over the last year, Datang Environment Industry Group shareholders took a loss of 18%, including dividends. In contrast the market gained about 25%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. However, the loss over the last year isn't as bad as the 17% per annum loss investors have suffered over the last three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Datang Environment Industry Group (of which 2 shouldn't be ignored!) 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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