Investors who bought shares of Bank of China (HKG: 3988) three years ago are now up 17% – Simply Wall St News

The purchase of a low-cost index fund will provide you with the average market return.
But overall, there are many actions that underperform the market.
For example, the Bank of China Limited (HKG: 3988) The three-year return of 17% is below the market return in the same period.
By zooming, the stock is actually down 13% over the last year.

See our latest badysis for Bank of China

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance.
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).

Over the course of three years of stock price growth, the Bank of China posted compound earnings per share growth of 1.6% a year.
In comparison, the 5.2% annual increase in the share price is higher than the growth of EPS.
It is therefore fair to badume that the market has a better view of the sector than it did three years ago.
This is not necessarily surprising if we record three years of earnings growth.

The graph below shows the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

Learn more about the Bank of China's key indicators in this interactive chart of Bank of China's income, income and cash flow.

What about dividends?

In addition to measuring the price performance of stocks, investors should also consider Total Shareholder Return (TSR).
The TSR incorporates the value of any split or updated capital increase, as well as any dividends, 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 the Bank of China, the TSR of the last three years was 39%, which is higher than the price performance of the action mentioned above.
The dividends paid by the company have stimulated total shareholder return.

A different perspective

We regret to announce that the shareholders of the Bank of China lost 8.2% over the year (dividends included). Unfortunately, this is worse than the broader market decline of 3.5%.
That said, it is inevitable that some stocks will be oversold in a declining market. The key is to keep your eyes on the fundamental developments.
On the positive side, long-term shareholders made money, gaining 7.5% a year over half a decade.
If fundamental data continues to indicate long-term sustainable growth, the current sale could be an opportunity that deserves to be considered.
With this in mind, a good step might be to take a look at the Bank of China's dividend roadmap. This free interactive graphic is a good place to start.

Of course Bank of China might not be the best stock to buy. So, you might want to see this free collection of growth stocks.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded 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.