The Johnson Health Tech (TPE:1736) Share Price Has Gained 144%, So Why Not Pay It Some Attention?

By
Simply Wall St
Published
November 27, 2020

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. For instance the Johnson Health Tech. Co., Ltd. (TPE:1736) share price is 144% higher than it was three years ago. How nice for those who held the stock! It's also up 19% in about a month. We note that Johnson Health Tech reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.

Check out our latest analysis for Johnson Health Tech

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Johnson Health Tech was able to grow its EPS at 36% per year over three years, sending the share price higher. Notably, the 35% average annual share price gain matches up nicely with the EPS growth rate. This suggests that sentiment and expectations have not changed drastically. Quite to the contrary, the share price has arguably reflected the EPS growth.

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

TSEC:1736 Earnings Per Share Growth November 27th 2020

It is of course excellent to see how Johnson Health Tech has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Johnson Health Tech's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Johnson Health Tech the TSR over the last 3 years was 153%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Investors in Johnson Health Tech had a tough year, with a total loss of 5.6% (including dividends), against a market gain of about 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 1 warning sign for Johnson Health Tech that you should be aware of.

Of course Johnson Health Tech 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 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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