Chang Hwa Commercial Bank (TWSE:2801) shareholders have earned a 5.0% CAGR over the last five years

The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market. But Chang Hwa Commercial Bank, Ltd. (TWSE:2801) has fallen short of that second goal, with a share price rise of 12% over five years, which is below the market return. The last year hasn't been great either, with the stock up just 3.9%.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Chang Hwa Commercial Bank

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During five years of share price growth, Chang Hwa Commercial Bank achieved compound earnings per share (EPS) growth of 0.5% per year. This EPS growth is slower than the share price growth of 2% per year, over the same period. 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.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into Chang Hwa Commercial Bank's key metrics by checking this interactive graph of Chang Hwa Commercial Bank's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Chang Hwa Commercial Bank the TSR over the last 5 years was 27%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Chang Hwa Commercial Bank shareholders are up 7.1% for the year (even including dividends). But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 5% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Chang Hwa Commercial Bank better, we need to consider many other factors. Even so, be aware that Chang Hwa Commercial Bank is showing 1 warning sign in our investment analysis , you should know about...

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Taiwanese 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.