Sanjiang Shopping Club Co.,Ltd (SHSE:601116) shareholders should be happy to see the share price up 17% in the last month. However, over the past five years, the stock’s performance has been poor. After all, the stock price has fallen 37% during this time, significantly underperforming the market.
Long-term shareholders are still in the red even though the stock has risen 16% over the past week, but let’s see what the fundamentals tell us.
Check out our latest analysis for Sanjiang Shopping ClubLtd.
In his essay “Graham and Doddsville’s Super Investors,” Warren Buffett explained that stock prices do not always rationally reflect the value of a company. One imperfect but simple way to consider how the market perception of a company has changed is to compare the change in the earnings per share (EPS) with the share price movement.
Looking back over 5 years, Sanjiang Shopping ClubLtd’s share price and EPS both declined. The latter is at a rate of 6.0% per year. This decline in EPS is less than the 9% annual decline in the share price. So it seems like the market used to have too much confidence in this business.
You can see below how EPS has changed over time (unveil the exact values by clicking on the image).
SHSE:601116 Earnings per share growth (September 30, 2024)
This free interactive report on Sanjiang Shopping ClubLtd’s earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). 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 increases and spin-offs. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. For Sanjiang Shopping ClubLtd, the TSR for the last 5 years was -31%. This exceeds the stock return mentioned earlier. Therefore, the dividends paid by the company boosted the total return for shareholders.
different perspective
Unfortunately, Sanjiang Shopping ClubLtd shareholders are down 25% for the year (even including dividends). Unfortunately, this is worse than the overall market decline of 6.0%. However, it is also possible that the stock price is simply affected by broader market fluctuations. It might be worth looking at the basics in case a good opportunity presents itself. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the 6% annualized loss over the past five years. Generally speaking, long-term stock price weakness can be a bad sign, but contrarian investors may want to research the stock in hopes of a turnaround. It’s always interesting to track stock performance over the long term. However, to understand Sanjiang Shopping ClubLtd better, you need to consider many other factors. For example, consider risk. Sanjiang Shopping ClubLtd has 2 warning signs (and 1 which makes us a bit uncomfortable) you should be aware of.
Of course, you might find great investments if you look elsewhere. So take a peek at this free list of companies expected to grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
