Fire Rock Holdings (HKG:1909) Has Rewarded Shareholders With An Exceptional 466% Total Return On Their Investment

Investing can be hard but the potential fo an individual stock to pay off big time inspires us. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. Take, for example, the Fire Rock Holdings Limited (HKG:1909) share price, which skyrocketed 435% over three years. And in the last month, the share price has gained 3.7%. But this could be related to good market conditions -- stocks in its market are up 8.0% in the last month.

View our latest analysis for Fire Rock Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Fire Rock Holdings was able to grow its EPS at 105% per year over three years, sending the share price higher. The average annual share price increase of 75% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 11.95 also reflects the negative sentiment around the stock.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Fire Rock Holdings' earnings, revenue and cash flow.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Fire Rock Holdings, it has a TSR of 466% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Fire Rock Holdings rewarded shareholders with a total shareholder return of 238% over the last year. That's including the dividend. That's better than the annualized TSR of 78% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting Fire Rock Holdings on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Fire Rock Holdings better, we need to consider many other factors. For example, we've discovered 1 warning sign for Fire Rock Holdings that you should be aware of before investing here.

Fire Rock Holdings is not the only stock that insiders are buying. 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 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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