In order to justify the effort of selecting individual stocks, it’s worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Yuen Chang Stainless Steel Co., Ltd. (TPE:2069) shareholders have had that experience, with the share price dropping 37% in three years, versus a market return of about 34%. And more recent buyers are having a tough time too, with a drop of 29% in the last year. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days.
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.
Yuen Chang Stainless Steel saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Since the company has fallen to a loss making position, it’s hard to compare the change in EPS with the share price change. But it’s safe to say we’d generally expect the share price to be lower as a result!
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Yuen Chang Stainless Steel’s key metrics by checking this interactive graph of Yuen Chang Stainless Steel’s earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Yuen Chang Stainless Steel, it has a TSR of -20% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
The last twelve months weren’t great for Yuen Chang Stainless Steel shares, which cost holders 21% , including dividends , while the market was up about 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 7.2% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. It’s always interesting to track share price performance over the longer term. But to understand Yuen Chang Stainless Steel better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Yuen Chang Stainless Steel (of which 1 shouldn’t be ignored!) you should know about.
But note: Yuen Chang Stainless Steel may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on TW exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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