If You Had Bought Nissin Foods (HKG:1475) Stock Three Years Ago, You Could Pocket A 103% Gain Today

It hasn't been the best quarter for Nissin Foods Company Limited (HKG:1475) shareholders, since the share price has fallen 15% in that time. In contrast, the return over three years has been impressive. In three years the stock price has launched 103% higher: a great result. So the recent fall in the share price should be viewed in that context. If the business can perform well for years to come, then the recent drop could be an opportunity.

Check out our latest analysis for Nissin Foods

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Nissin Foods was able to grow its EPS at 19% per year over three years, sending the share price higher. This EPS growth is lower than the 27% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.

You can see below how EPS has changed over time (discover 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. This free interactive report on Nissin Foods' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Nissin Foods the TSR over the last 3 years was 114%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Nissin Foods shareholders are up 9.0% for the year (even including dividends). It's always nice to make money but this return falls short of the market return which was about 20% for the year. But the (superior) three-year TSR of 29% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Nissin Foods by clicking this link.

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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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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