Did You Participate In Any Of Arcadyan Technology's (TPE:3596) Fantastic 257% Return ?

By
Simply Wall St
Published
April 26, 2021
TWSE:3596
Source: Shutterstock

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%. One great example is Arcadyan Technology Corporation (TPE:3596) which saw its share price drive 169% higher over five years. On top of that, the share price is up 23% in about a quarter. But this could be related to the strong market, which is up 9.2% in the last three months.

Check out our latest analysis for Arcadyan Technology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 five years of share price growth, Arcadyan Technology achieved compound earnings per share (EPS) growth of 22% per year. That makes the EPS growth particularly close to the yearly share price growth of 22%. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Indeed, it would appear the share price is reacting to the EPS.

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

earnings-per-share-growth
TSEC:3596 Earnings Per Share Growth April 27th 2021

We know that Arcadyan Technology has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. In the case of Arcadyan Technology, it has a TSR of 257% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Arcadyan Technology provided a TSR of 61% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 29% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Arcadyan Technology better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Arcadyan Technology , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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