Stock Analysis

Is TCI's (GTSM:8436) 160% Share Price Increase Well Justified?

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TPEX:8436
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It hasn't been the best quarter for TCI Co., Ltd. (GTSM:8436) shareholders, since the share price has fallen 16% in that time. But in stark contrast, the returns over the last half decade have impressed. In fact, the share price is 160% higher today. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Only time will tell if there is still too much optimism currently reflected in the share price. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 22% drop, in the last year.

See our latest analysis for TCI

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During five years of share price growth, TCI achieved compound earnings per share (EPS) growth of 46% per year. The EPS growth is more impressive than the yearly share price gain of 21% over the same period. So one could conclude that the broader market has become more cautious towards the stock.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
GTSM:8436 Earnings Per Share Growth February 19th 2021

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

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, TCI's TSR for the last 5 years was 180%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 44% in the last year, TCI shareholders lost 20% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 23%, each year, over five years. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with TCI , and understanding them should be part of your investment process.

We will like TCI better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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About TPEX:8436

TCI

TCI Co., Ltd., an original design manufacturer company, engages in the research, development, manufactures, and sales of functional health food, food supplements, and skin care products.

Excellent balance sheet with reasonable growth potential.

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