Shareholders of Taiwan Surface Mounting Technology (TPE:6278) Must Be Delighted With Their 345% Total Return

It hasn't been the best quarter for Taiwan Surface Mounting Technology Corp. (TPE:6278) shareholders, since the share price has fallen 11% in that time. But over the last three years the stock has shone bright like a diamond. In fact, the share price has taken off in that time, up 307%. As long term investors the recent fall doesn't detract all that much from the longer term story. The share price action could signify that the business itself is dramatically improved, in that time.

Check out our latest analysis for Taiwan Surface Mounting Technology

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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, Taiwan Surface Mounting Technology achieved compound earnings per share growth of 43% per year. This EPS growth is lower than the 60% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

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

We know that Taiwan Surface Mounting Technology has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Taiwan Surface Mounting Technology stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Taiwan Surface Mounting Technology's TSR for the last 3 years was 345%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Taiwan Surface Mounting Technology shareholders are up 22% for the year (even including dividends). But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 35% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Taiwan Surface Mounting Technology has 2 warning signs we think you should be aware of.

Of course Taiwan Surface Mounting Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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