The Chunghwa Chemical Synthesis & Biotech (TPE:1762) Share Price Is Up 131% And Shareholders Are Boasting About It

Chunghwa Chemical Synthesis & Biotech Co., Ltd. (TPE:1762) shareholders might be concerned after seeing the share price drop 12% in the last month. But in three years the returns have been great. The share price marched upwards over that time, and is now 131% higher than it was. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.

Check out our latest analysis for Chunghwa Chemical Synthesis & Biotech

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Chunghwa Chemical Synthesis & Biotech was able to grow its EPS at 92% per year over three years, sending the share price higher. The average annual share price increase of 32% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.26.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Chunghwa Chemical Synthesis & Biotech has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

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 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Chunghwa Chemical Synthesis & Biotech's TSR for the last 3 years was 147%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Chunghwa Chemical Synthesis & Biotech has rewarded shareholders with a total shareholder return of 80% in the last twelve months. That's including the dividend. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Chunghwa Chemical Synthesis & Biotech better, we need to consider many other factors. Take risks, for example - Chunghwa Chemical Synthesis & Biotech has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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