Is China Feihe's (HKG:6186) 137% Share Price Increase Well Justified?

Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the China Feihe Limited (HKG:6186) share price had more than doubled in just one year - up 137%. In the last week shares have slid back 4.3%. We'll need to follow China Feihe for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

View our latest analysis for China Feihe

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.

China Feihe was able to grow EPS by 59% in the last twelve months. This EPS growth is significantly lower than the 137% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that China Feihe has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

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. We note that for China Feihe the TSR over the last year was 142%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

China Feihe boasts a total shareholder return of 142% for the last year (that includes the dividends) . That's better than the more recent three month gain of 2.4%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). Is China Feihe cheap compared to other companies? These 3 valuation measures might help you decide.

But note: China Feihe 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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