Wisdom Marine Lines Limited (Cayman) (TWSE:2637) jumps 3.7% this week, though earnings growth is still tracking behind five-year shareholder returns

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is Wisdom Marine Lines Co., Limited (Cayman) (TWSE:2637) which saw its share price drive 162% higher over five years. Also pleasing for shareholders was the 24% gain in the last three months. But this could be related to the strong market, which is up 15% in the last three months.

Since it's been a strong week for Wisdom Marine Lines Limited (Cayman) shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Wisdom Marine Lines Limited (Cayman)

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Wisdom Marine Lines Limited (Cayman) achieved compound earnings per share (EPS) growth of 15% per year. This EPS growth is slower than the share price growth of 21% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.

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

It is of course excellent to see how Wisdom Marine Lines Limited (Cayman) has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Wisdom Marine Lines Limited (Cayman) 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Wisdom Marine Lines Limited (Cayman) the TSR over the last 5 years was 248%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Wisdom Marine Lines Limited (Cayman) has rewarded shareholders with a total shareholder return of 49% in the last twelve months. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 28% 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. 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 - Wisdom Marine Lines Limited (Cayman) has 3 warning signs (and 1 which is concerning) we think you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.