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  • Home > News > Company News > Xinyi Glass Holdings' (HKG:868) earnings growth rate lags the 32% CAGR delivered to shareholders

    Xinyi Glass Holdings' (HKG:868) earnings growth rate lags the 32% CAGR delivered to shareholders

    Post Time:Dec 15,2021Classify:Company NewsView:978

    While Xinyi Glass Holdings Limited (HKG:868) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 29% in the last quarter. But that scarcely detracts from the really solid long term returns generated by the company over five years. It's fair to say most would be happy with 212% the gain in that time. Generally speaking the long term returns will give you a better idea of business quality than short periods can. The more important question is whether the stock is too cheap or too expensive today.

    While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

    See our latest analysis for Xinyi Glass Holdings

    While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

    Over half a decade, Xinyi Glass Holdings managed to grow its earnings per share at 32% a year. This EPS growth is higher than the 26% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. The reasonably low P/E ratio of 7.39 also suggests market apprehension.

    The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

    SEHK:868 Earnings Per Share Growth December 15th 2021

    It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Xinyi Glass Holdings' earnings, revenue and cash flow.

    What About Dividends?

    It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. We note that for Xinyi Glass Holdings the TSR over the last 5 years was 306%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

    A Different Perspective

    It's nice to see that Xinyi Glass Holdings shareholders have received a total shareholder return of 1.3% over the last year. That's including the dividend. Having said that, the five-year TSR of 32% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Xinyi Glass Holdings (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

    Xinyi Glass Holdings is not the only stock that insiders are buying. 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 HK exchanges.

    Source: https://simplywall.st/Author: shangyi

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