Tianjin Port Holdings (SHSE:600717) sheds 3.1% this week, as yearly returns fall more in line with earnings growth

Simply Wall St · 10/21 22:11

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Tianjin Port Holdings Co., Ltd. (SHSE:600717) share price is 15% higher than it was a year ago, much better than the market return of around 4.6% (not including dividends) in the same period. So that should have shareholders smiling. Looking back further, the share price is 13% higher than it was three years ago.

While the stock has fallen 3.1% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for Tianjin Port Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Tianjin Port Holdings was able to grow EPS by 17% in the last twelve months. This EPS growth is reasonably close to the 15% increase in the share price. This makes us think the market hasn't really changed its sentiment around the company, in the last year. It makes intuitive sense that the share price and EPS would grow at similar rates.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
SHSE:600717 Earnings Per Share Growth October 21st 2024

We know that Tianjin Port Holdings has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Tianjin Port Holdings will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the 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 raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Tianjin Port Holdings the TSR over the last 1 year was 17%, 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

It's good to see that Tianjin Port Holdings has rewarded shareholders with a total shareholder return of 17% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 4% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Tianjin Port Holdings .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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