Holly Futures (HKG:3678) shareholder returns have been solid, earning 151% in 3 years

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Holly Futures Co., Ltd. (HKG:3678) share price has soared 129% in the last three years. Most would be happy with that. And in the last month, the share price has gained 16%.

Since the stock has added HK$202m 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 Holly Futures

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 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).

Over the last three years, Holly Futures failed to grow earnings per share, which fell 58% (annualized).

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Therefore, we think it's worth considering other metrics as well.

Do you think that shareholders are buying for the 2.8% per annum revenue growth trend? We don't. So truth be told we can't see an easy explanation for the share price action, but perhaps you can...

You can see how earnings and revenue have 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 Holly Futures' earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered Holly Futures' share price action, but we should also mention its 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. Dividends have been really beneficial for Holly Futures shareholders, and that cash payout contributed to why its TSR of 151%, over the last 3 years, is better than the share price return.

A Different Perspective

It's nice to see that Holly Futures shareholders have received a total shareholder return of 21% over the last year. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. 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 Holly Futures better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Holly Futures .

For those who like to find winning investments 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.