Ta Ya Electric Wire & Cable's (TWSE:1609) five-year total shareholder returns outpace the underlying earnings growth

Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. For example, the Ta Ya Electric Wire & Cable Co., Ltd. (TWSE:1609) share price is up a whopping 431% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. But it's down 9.1% in the last week. But note that the broader market is down 5.5% since last week, and this may have impacted Ta Ya Electric Wire & Cable's share price.

Since the long term performance has been good but there's been a recent pullback of 9.1%, let's check if the fundamentals match the share price.

Check out our latest analysis for Ta Ya Electric Wire & Cable

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.

Over half a decade, Ta Ya Electric Wire & Cable managed to grow its earnings per share at 38% a year. So the EPS growth rate is rather close to the annualized share price gain of 40% per year. That suggests that the market sentiment around the company hasn't changed much over that time. Indeed, it would appear the share price is reacting to the EPS.

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

It might be well worthwhile taking a look at our free report on Ta Ya Electric Wire & Cable'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 Ta Ya Electric Wire & Cable the TSR over the last 5 years was 485%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Ta Ya Electric Wire & Cable has rewarded shareholders with a total shareholder return of 42% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 42% per year, is even more impressive. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Ta Ya Electric Wire & Cable (1 makes us a bit uncomfortable) that you should be aware of.

If you are like me, then you will not want to miss this free list of undervalued small caps 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 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.