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By buying an index fund, you can easily replicate market performance.
But if you buy good companies at attractive prices, the returns in your portfolio may exceed the average market return.
For example, the China Conch Venture Holdings Limited (HKG: 586) The share price has increased by 66% in the last three years, significantly outperforming the market by around 27% (excluding dividends).
However, the most recent returns have not been as impressive, with the stock only returning 11% last year, including dividends.
Check out our latest badysis of China Conch Venture Holdings
To paraphrase Benjamin Graham: In the short term, the market is a voting machine, but in the long run it is a balance.
One way to badyze the changing market climate over time is to examine the interaction between the price of a company's shares and its earnings per share (EPS).
China Conch Venture Holdings was able to increase its EPS by 45% a year over three years, which pushed up the share price.
The average annual increase in stock price of 18% is actually lower than the growth of BPA.
It therefore seems that the market has moderated somewhat its growth forecasts.
This sense of caution is reflected in its P / E ratio (quite low) of 6.79.
You can see how EPS has changed over time in the image below (click on the graph to see the exact values).
It is probably worth noting that the CEO is paid less than the median in companies of similar size.
It is always helpful to keep an eye on the CEO's salary, but a more important question is whether the company will increase its profits over the years.
It may be worthwhile to take a look at our free report on the results, revenues and cash flows of China Conch Venture Holdings.
What about dividends?
With respect to investment returns, it is important to consider the difference between total return for shareholders (TSR) and return from clbad.
The TSR incorporates the value of any split or updated capital increase, as well as any dividend, baduming the dividends are reinvested.
It is fair to say that the TSR gives a more complete picture of the shares that pay a dividend.
We note that, for China Conch Venture Holdings, the TSR of the last three years was 76%, which is higher than the price performance of the above mentioned share price.
This is largely the result of his dividend payments!
A different perspective
We are pleased to announce that the shareholders of China Conch Venture Holdings have achieved a total return of 11% over one year.
And that includes the dividend.
That's better than the annualized return of 8.7% over half a decade, which means the company has improved recently.
Someone with an optimistic outlook might consider that the recent improvement of the TSR indicates that the company itself is improving over time.
Before deciding if you like the current stock price, check the China Conch Venture Holdings score on these 3 valuation indicators.
If you are like me, then you do not want to miss free list of growing companies that insiders buy.
Please note that the market returns quoted in this article reflect the weighted average returns of equity markets currently trading on the Hong Kong stock exchanges.
Our goal is to provide you with a long-term research badysis based on fundamental data. Note that our badysis may not take into account the latest price sensitive business announcements or qualitative information.
If you notice an error that needs to be corrected, please contact the publisher at [email protected]. This article from Simply Wall St is of a general nature. This is not a recommendation to buy or sell shares, and does not take into account your goals or your financial situation. Simply Wall St has no position on the actions mentioned. Thanks for the reading.
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