Does Asiainfo Technologies' (HKG:1675) Share Price Gain of 32% Match Its Business Performance?

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Asiainfo Technologies Limited (HKG:1675) share price is 32% higher than it was a year ago, much better than the market return of around 20% (not including dividends) in the same period. That's a solid performance by our standards! We'll need to follow Asiainfo Technologies 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 Asiainfo Technologies

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Asiainfo Technologies grew its earnings per share (EPS) by 181%. This EPS growth is significantly higher than the 32% increase in the share price. So it seems like the market has cooled on Asiainfo Technologies, despite the growth. Interesting.

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

We know that Asiainfo Technologies 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?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Asiainfo Technologies the TSR over the last year was 35%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Asiainfo Technologies shareholders should be happy with the total gain of 35% over the last twelve months, including dividends. And the share price momentum remains respectable, with a gain of 12% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Asiainfo Technologies has 2 warning signs we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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