Shareholders Of Hong-Wei Electrical Industry (GTSM:4565) Must Be Happy With Their 42% Return

It hasn't been the best quarter for Hong-Wei Electrical Industry & Co., Ltd. (GTSM:4565) shareholders, since the share price has fallen 11% in that time. But at least the stock is up over the last three years. In that time, it is up 19%, which isn't bad, but not amazing either.

Check out our latest analysis for Hong-Wei Electrical Industry

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Hong-Wei Electrical Industry was able to grow its EPS at 5.1% per year over three years, sending the share price higher. We note that the 6% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This observation indicates that the market's attitude to the business hasn't changed all that much. Rather, the share price has approximately tracked EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

This free interactive report on Hong-Wei Electrical Industry's earnings, revenue and cash flow 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). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Hong-Wei Electrical Industry, it has a TSR of 42% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

Over the last year Hong-Wei Electrical Industry shareholders have received a TSR of 2.6%. Unfortunately this falls short of the market return of around 38%. But the (superior) three-year TSR of 12% per year is some consolation. Even the best companies don't see strong share price performance every year. It's always interesting to track share price performance over the longer term. But to understand Hong-Wei Electrical Industry better, we need to consider many other factors. Take risks, for example - Hong-Wei Electrical Industry 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 TW 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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