On average, over time, stock markets tend to rise higher. This makes investing attractive. But not every stock you buy will perform as well as the overall market. Over the last year the Haitong Unitrust International Financial Leasing Co., Ltd. (HKG:1905) share price is up 16%, but that's less than the broader market return. Haitong Unitrust International Financial Leasing hasn't been listed for long, so it's still not clear if it is a long term winner.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Over the last twelve months, Haitong Unitrust International Financial Leasing actually shrank its EPS by 21%.
Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
Unfortunately Haitong Unitrust International Financial Leasing's fell 8.6% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of Haitong Unitrust International Financial Leasing, it has a TSR of 20% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Haitong Unitrust International Financial Leasing shareholders have gained 20% for the year (even including dividends). While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 37%. However, that falls short of the 33% gain it has made, for shareholders, in the last three months. It's worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. It's always interesting to track share price performance over the longer term. But to understand Haitong Unitrust International Financial Leasing better, we need to consider many other factors. Even so, be aware that Haitong Unitrust International Financial Leasing is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
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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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