Wha Yu Industrial (TWSE:3419) pulls back 12% this week, but still delivers shareholders decent 8.8% CAGR over 5 years

Wha Yu Industrial Co., Ltd. (TWSE:3419) shareholders might be concerned after seeing the share price drop 17% in the last quarter. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 46%, less than the market return of 165%.

Since the long term performance has been good but there's been a recent pullback of 12%, let's check if the fundamentals match the share price.

Wha Yu Industrial isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

For the last half decade, Wha Yu Industrial can boast revenue growth at a rate of 4.0% per year. Put simply, that growth rate fails to impress. It's probably fair to say that the modest growth is reflected in the modest share price gain of 8% per year. It seems likely that we'll have to zoom in on the data, including profits, to understand if there is an opportunity here.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

This free interactive report on Wha Yu Industrial's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Wha Yu Industrial's total shareholder return (TSR) and its 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. Dividends have been really beneficial for Wha Yu Industrial shareholders, and that cash payout contributed to why its TSR of 52%, over the last 5 years, is better than the share price return.

A Different Perspective

Wha Yu Industrial shareholders are down 8.5% for the year, but the market itself is up 8.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Wha Yu Industrial better, we need to consider many other factors. Take risks, for example - Wha Yu Industrial has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

For those who like to find winning investments this free list of undervalued 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 Taiwanese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.