Canvest Environmental Protection Group (HKG:1381) shareholders YoY returns are lagging the company's 29% one-year earnings growth

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. For example, the Canvest Environmental Protection Group Company Limited (HKG:1381) share price is up 19% in the last 1 year, clearly besting the market decline of around 22% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 5.2% in the last three years.

In light of the stock dropping 4.3% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

Check out our latest analysis for Canvest Environmental Protection Group

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Canvest Environmental Protection Group was able to grow EPS by 29% in the last twelve months. It's fair to say that the share price gain of 19% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Canvest Environmental Protection Group as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.65.

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 Canvest Environmental Protection Group has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Canvest Environmental Protection Group the TSR over the last 1 year was 22%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Canvest Environmental Protection Group shareholders have received a total shareholder return of 22% over one year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.9% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Canvest Environmental Protection Group better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Canvest Environmental Protection Group (including 2 which don't sit too well with us) .

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. 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.