Did You Miss Service & Quality Group's (GTSM:3219) Impressive 183% Share Price Gain?

When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Service & Quality Group Co., Ltd. (GTSM:3219) share price has soared 183% in the last half decade. Most would be very happy with that. It's also up 25% in about a month.

See our latest analysis for Service & Quality Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the five years of share price growth, Service & Quality Group moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Service & Quality Group share price is down 17% in the last three years. In the same period, EPS is up 84% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -6% per year.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Service & Quality Group's key metrics by checking this interactive graph of Service & Quality Group's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Service & Quality Group shareholders have received a total shareholder return of 160% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 23% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Service & Quality Group (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

We will like Service & Quality Group better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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