Chung-Hsin Electric and Machinery Manufacturing (TWSE:1513) stock performs better than its underlying earnings growth over last five years

Chung-Hsin Electric and Machinery Manufacturing Corp. (TWSE:1513) shareholders have seen the share price descend 26% over the month. But that does not change the realty that the stock's performance has been terrific, over five years. Indeed, the share price is up a whopping 714% in that time. So it might be that some shareholders are taking profits after good performance. But the real question is whether the business fundamentals can improve over the long term. We love happy stories like this one. The company should be really proud of that performance!

Since the stock has added NT$7.7b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Chung-Hsin Electric and Machinery Manufacturing

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.

Over half a decade, Chung-Hsin Electric and Machinery Manufacturing managed to grow its earnings per share at 21% a year. This EPS growth is slower than the share price growth of 52% 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. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 46.94.

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

It might be well worthwhile taking a look at our free report on Chung-Hsin Electric and Machinery Manufacturing'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 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Chung-Hsin Electric and Machinery Manufacturing, it has a TSR of 911% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Chung-Hsin Electric and Machinery Manufacturing shareholders have received a total shareholder return of 56% over the last year. Of course, that includes the dividend. Having said that, the five-year TSR of 59% a year, is even better. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Chung-Hsin Electric and Machinery Manufacturing has 3 warning signs we think you should be aware of.

We will like Chung-Hsin Electric and Machinery Manufacturing better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.