Stock Analysis

Can You Imagine How Jubilant Zhongyu Gas Holdings' (HKG:3633) Shareholders Feel About Its 269% Share Price Gain?

SEHK:3633
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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For example, the Zhongyu Gas Holdings Limited (HKG:3633) share price has soared 269% in the last half decade. Most would be very happy with that.

View our latest analysis for Zhongyu Gas 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. 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 five years of share price growth, Zhongyu Gas Holdings achieved compound earnings per share (EPS) growth of 5.7% per year. This EPS growth is lower than the 30% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
SEHK:3633 Earnings Per Share Growth February 11th 2021

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. It might be well worthwhile taking a look at our free report on Zhongyu Gas 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. 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. As it happens, Zhongyu Gas Holdings' TSR for the last 5 years was 280%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Zhongyu Gas Holdings provided a TSR of 3.1% over the last twelve months. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 31% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Zhongyu Gas Holdings better, we need to consider many other factors. Even so, be aware that Zhongyu Gas Holdings is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

Zhongyu Gas 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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