Yangzhou Guangling District Taihe Rural Micro-finance's (HKG:1915) Shareholders Are Down 57% On Their Shares

Yangzhou Guangling District Taihe Rural Micro-finance Company Limited (HKG:1915) shareholders should be happy to see the share price up 18% in the last week. Meanwhile over the last three years the stock has dropped hard. Regrettably, the share price slid 57% in that period. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.

Check out our latest analysis for Yangzhou Guangling District Taihe Rural Micro-finance

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.

Yangzhou Guangling District Taihe Rural Micro-finance saw its EPS decline at a compound rate of 4.6% per year, over the last three years. The share price decline of 24% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Yangzhou Guangling District Taihe Rural Micro-finance's TSR for the last 3 years was -55%, 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, Yangzhou Guangling District Taihe Rural Micro-finance shareholders took a loss of 55%, including dividends. In contrast the market gained about 11%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Yangzhou Guangling District Taihe Rural Micro-finance is showing 4 warning signs in our investment analysis , you should know about...

But note: Yangzhou Guangling District Taihe Rural Micro-finance may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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This article by Simply Wall St is general in nature. 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.
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