Shareholders 12% loss in Sun Race Sturmey-Archer (TWSE:1526) partly attributable to the company's decline in earnings over past year

Sun Race Sturmey-Archer Corporation (TWSE:1526) shareholders should be happy to see the share price up 17% in the last month. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 17% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added NT$279m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Sun Race Sturmey-Archer

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Unhappily, Sun Race Sturmey-Archer had to report a 63% decline in EPS over the last year. This fall in the EPS is significantly worse than the 17% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Sun Race Sturmey-Archer's TSR for the last 1 year was -12%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Sun Race Sturmey-Archer shareholders are down 12% for the year (even including dividends), but the market itself is up 27%. 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 6% 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. To that end, you should learn about the 4 warning signs we've spotted with Sun Race Sturmey-Archer (including 2 which are a bit unpleasant) .

If you are like me, then you will not want to miss this free list of growing companies 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.