GEM Terminal IndustryLtd (TWSE:2460) shareholder returns have been splendid, earning 237% in 5 years

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term GEM Terminal Industry Co.,Ltd. (TWSE:2460) shareholders would be well aware of this, since the stock is up 231% in five years. On top of that, the share price is up 39% in about a quarter.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for GEM Terminal IndustryLtd

GEM Terminal IndustryLtd wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last 5 years GEM Terminal IndustryLtd saw its revenue shrink by 5.0% per year. Given that scenario, we wouldn't have expected the share price to rise 27% per year, but that's what it did. It just goes to show tht the market is forward looking, and it's not always easy to predict the future based on past trends. Still, this situation makes us a little wary of the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between GEM Terminal IndustryLtd's total shareholder return (TSR) and its share price return. 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. GEM Terminal IndustryLtd's TSR of 237% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that GEM Terminal IndustryLtd shareholders have received a total shareholder return of 114% over the last year. That gain is better than the annual TSR over five years, which is 28%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand GEM Terminal IndustryLtd better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for GEM Terminal IndustryLtd you should be aware of.

Of course GEM Terminal IndustryLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.