Stock Analysis

Investors Who Bought Sunmax Biotechnology (GTSM:4728) Shares Three Years Ago Are Now Up 166%

TPEX:4728
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It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. To wit, the Sunmax Biotechnology Co., Ltd. (GTSM:4728) share price has flown 166% in the last three years. How nice for those who held the stock! On top of that, the share price is up 11% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 16% in 90 days).

See our latest analysis for Sunmax Biotechnology

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

During three years of share price growth, Sunmax Biotechnology achieved compound earnings per share growth of 71% per year. The average annual share price increase of 39% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
GTSM:4728 Earnings Per Share Growth March 1st 2021

This free interactive report on Sunmax Biotechnology's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 Sunmax Biotechnology, it has a TSR of 178% 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

Sunmax Biotechnology shareholders gained a total return of 22% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 14% over half a decade It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand Sunmax Biotechnology better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Sunmax Biotechnology you should know about.

But note: Sunmax Biotechnology 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.

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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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