If You Had Bought Lih Tai Construction Enterprise (GTSM:5520) Shares A Year Ago You'd Have Earned 73% Returns

On average, over time, stock markets tend to rise higher. This makes investing attractive. But not every stock you buy will perform as well as the overall market. For example, the Lih Tai Construction Enterprise Co., Ltd. (GTSM:5520), share price is up over the last year, but its gain of 73% trails the market return. It is also impressive that the stock is up 53% over three years, adding to the sense that it is a real winner.

Check out our latest analysis for Lih Tai Construction Enterprise

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Lih Tai Construction Enterprise was able to grow EPS by 170% in the last twelve months. This EPS growth is significantly higher than the 73% increase in the share price. Therefore, it seems the market isn't as excited about Lih Tai Construction Enterprise as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.79.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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

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. We note that for Lih Tai Construction Enterprise the TSR over the last year was 82%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Lih Tai Construction Enterprise provided a TSR of 82% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 16% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Lih Tai Construction Enterprise better, we need to consider many other factors. For instance, we've identified 1 warning sign for Lih Tai Construction Enterprise that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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