CGN New Energy Holdings (HKG:1811) sheds 13% this week, as yearly returns fall more in line with earnings growth

The CGN New Energy Holdings Co., Ltd. (HKG:1811) share price has had a bad week, falling 13%. But that isn't a problem when you consider how the share price has soared over the last year. Indeed, the share price is up a whopping 487% in that time. So we wouldn't blame sellers for taking some profits. While winners often keep winning, it can pay to be cautious after a strong rise.

In light of the stock dropping 13% 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 CGN New Energy Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year CGN New Energy Holdings grew its earnings per share (EPS) by 55%. The share price gain of 487% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that CGN New Energy Holdings has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on CGN New Energy Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of CGN New Energy Holdings, it has a TSR of 520% for the last 1 year. 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

It's nice to see that CGN New Energy Holdings shareholders have received a total shareholder return of 520% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 45%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand CGN New Energy Holdings better, we need to consider many other factors. Even so, be aware that CGN New Energy Holdings is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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.

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.

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