Shareholders Of Formosa Advanced Technologies (TPE:8131) Must Be Happy With Their 165% Total Return

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. Furthermore, you'd generally like to see the share price rise faster than the market But Formosa Advanced Technologies Co., Ltd. (TPE:8131) has fallen short of that second goal, with a share price rise of 85% over five years, which is below the market return. However, if you include the dividends then the return is market beating. Unfortunately the share price is down 3.6% in the last year.

View our latest analysis for Formosa Advanced Technologies

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Formosa Advanced Technologies achieved compound earnings per share (EPS) growth of 4.2% per year. This EPS growth is slower than the share price growth of 13% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

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

Dive deeper into Formosa Advanced Technologies' key metrics by checking this interactive graph of Formosa Advanced Technologies's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Formosa Advanced Technologies, it has a TSR of 165% for the last 5 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

Formosa Advanced Technologies shareholders gained a total return of 2.0% during the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 21% 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. It's always interesting to track share price performance over the longer term. But to understand Formosa Advanced Technologies better, we need to consider many other factors. Take risks, for example - Formosa Advanced Technologies has 1 warning sign we think you should be aware of.

But note: Formosa Advanced Technologies 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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