Tongguan Gold Group (HKG:340) shareholder returns have been notable, earning 53% in 5 years

When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Tongguan Gold Group Limited (HKG:340) shareholders have enjoyed a 53% share price rise over the last half decade, well in excess of the market return of around 9.4% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 40% in the last year.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

Check out our latest analysis for Tongguan Gold Group

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...' 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 the last half decade, Tongguan Gold Group became profitable. That would generally be considered a positive, so we'd hope to see the share price to rise. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Tongguan Gold Group share price is down 19% in the last three years. During the same period, EPS grew by 17% each year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -7% per year.

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

Dive deeper into Tongguan Gold Group's key metrics by checking this interactive graph of Tongguan Gold Group's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Tongguan Gold Group shareholders have received a total shareholder return of 40% over one year. That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before forming an opinion on Tongguan Gold Group you might want to consider these 3 valuation metrics.

We will like Tongguan Gold Group better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.