Despite shrinking by CN¥386m in the past week, Nanjing Public Utilities Development (SZSE:000421) shareholders are still up 29% over 5 years

Simply Wall St · 10/15 22:37

The Nanjing Public Utilities Development Co., Ltd. (SZSE:000421) share price has had a bad week, falling 11%. On the bright side the share price is up over the last half decade. However we are not very impressed because the share price is only up 18%, less than the market return of 22%.

Although Nanjing Public Utilities Development has shed CN¥386m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

See our latest analysis for Nanjing Public Utilities Development

Given that Nanjing Public Utilities Development didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last 5 years Nanjing Public Utilities Development saw its revenue grow at 5.2% per year. That's not a very high growth rate considering the bottom line. The modest growth is probably broadly reflected in the share price, which is up 3%, per year over 5 years. We'd be looking for the underlying business to grow revenue a bit faster.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
SZSE:000421 Earnings and Revenue Growth October 15th 2024

This free interactive report on Nanjing Public Utilities Development's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Nanjing Public Utilities Development the TSR over the last 5 years was 29%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Nanjing Public Utilities Development shareholders have received a total shareholder return of 11% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 5%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Nanjing Public Utilities Development (of which 3 are a bit concerning!) you should know about.

We will like Nanjing Public Utilities Development better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.