When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Taliang Technology Co., Ltd. (TPE:3167) share price is up 63% in the last five years, that’s less than the market return. But if you include dividends then the return is market-beating. Over the last twelve months the stock price has risen a very respectable 12%.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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.
Taliang Technology’s earnings per share are down 9.7% per year, despite strong share price performance over five years.
Essentially, it doesn’t seem likely that investors are focused on EPS. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.
We note that the dividend is higher than it was previously – always nice to see. Maybe dividend investors have helped support the share price. The revenue growth of about 3.6% per year might also encourage buyers.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Taliang Technology’s balance sheet strength is a great place to start, if you want to investigate the stock further.
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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Taliang Technology, it has a TSR of 115% for the last 5 years. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Taliang Technology shareholders gained a total return of 17% during the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 17% per year over five year. This suggests the company might be improving over time. It’s always interesting to track share price performance over the longer term. But to understand Taliang Technology better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we’ve spotted with Taliang Technology .
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on TW exchanges.
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This article by Simply Wall St is general in nature. 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.
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