If You Had Bought Dr. Wu Skincare's (GTSM:6523) Shares Five Years Ago You Would Be Down 66%

While it may not be enough for some shareholders, we think it is good to see the Dr. Wu Skincare Co., Ltd. (GTSM:6523) share price up 18% in a single quarter. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. The share price has failed to impress anyone , down a sizable 66% during that time. Some might say the recent bounce is to be expected after such a bad drop. But it could be that the fall was overdone.

Check out our latest analysis for Dr. Wu Skincare

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Looking back five years, both Dr. Wu Skincare's share price and EPS declined; the latter at a rate of 3.7% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 19% per year, over the period. This implies that the market was previously too optimistic about the stock.

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?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Dr. Wu Skincare's TSR for the last 5 years was -56%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Dr. Wu Skincare provided a TSR of 12% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 9% endured over half a decade. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Dr. Wu Skincare better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Dr. Wu Skincare you should be aware of, and 1 of them shouldn't be ignored.

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 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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