Zijin Mining Group's (HKG:2899) earnings growth rate lags the 37% CAGR delivered to shareholders

We think all investors should try to buy and hold high quality multi-year winners. And highest quality companies can see their share prices grow by huge amounts. Don't believe it? Then look at the Zijin Mining Group Company Limited (HKG:2899) share price. It's 334% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. The last week saw the share price soften some 8.1%.

Since the long term performance has been good but there's been a recent pullback of 8.1%, let's check if the fundamentals match the share price.

View our latest analysis for Zijin Mining Group

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. 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).

During five years of share price growth, Zijin Mining Group achieved compound earnings per share (EPS) growth of 47% per year. This EPS growth is higher than the 34% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Zijin Mining Group has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Zijin Mining Group will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Zijin Mining Group the TSR over the last 5 years was 386%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Zijin Mining Group shareholders gained a total return of 19% during the year. Unfortunately this falls short of the market return. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 37% over five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Zijin Mining Group better, we need to consider many other factors. Even so, be aware that Zijin Mining Group is showing 1 warning sign in our investment analysis , you should know about...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.