Pan Asia Environmental Protection Group's (HKG:556) one-year earnings growth trails the decent shareholder returns

It hasn't been the best quarter for Pan Asia Environmental Protection Group Limited (HKG:556) shareholders, since the share price has fallen 10% in that time. But looking back over the last year, the returns have actually been rather pleasing! Looking at the full year, the company has easily bested an index fund by gaining 87%.

Since the stock has added HK$54m 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 Pan Asia Environmental Protection Group

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Pan Asia Environmental Protection Group was able to grow EPS by 62% in the last twelve months. This EPS growth is significantly lower than the 87% increase in the share price. This indicates that the market is now more optimistic about the stock. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 77.48.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's good to see that Pan Asia Environmental Protection Group has rewarded shareholders with a total shareholder return of 87% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 7% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Pan Asia Environmental Protection Group better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Pan Asia Environmental Protection Group .

Pan Asia Environmental Protection Group is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

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.