Investing in Shin Kong Financial Holding (TWSE:2888) a year ago would have delivered you a 39% gain

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Shin Kong Financial Holding Co., Ltd. (TWSE:2888) share price is 36% higher than it was a year ago, much better than the market return of around 28% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 9.1% higher than it was three years ago.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Shin Kong Financial Holding

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Shin Kong Financial Holding went from making a loss to reporting a profit, in the last year.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

We think that the revenue growth of 40% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that Shin Kong Financial Holding has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Shin Kong Financial Holding

What About The Total Shareholder Return (TSR)?

We've already covered Shin Kong Financial Holding's share price action, but we should also mention its total shareholder return (TSR). 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. Dividends have been really beneficial for Shin Kong Financial Holding shareholders, and that cash payout contributed to why its TSR of 39%, over the last 1 year, is better than the share price return.

A Different Perspective

It's good to see that Shin Kong Financial Holding has rewarded shareholders with a total shareholder return of 39% in the last twelve months. That's better than the annualised return of 6% over half a decade, implying that the company is doing better recently. 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 Shin Kong Financial Holding better, we need to consider many other factors. For instance, we've identified 2 warning signs for Shin Kong Financial Holding that you should be aware of.

Of course Shin Kong Financial Holding 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.