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Natural Food International Holding (HKG:1837) stock performs better than its underlying earnings growth over last three years

Simply Wall St · 4d ago

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the Natural Food International Holding Limited (HKG:1837) share price is 138% higher than it was three years ago. That sort of return is as solid as granite. Meanwhile the share price is 11% higher than it was a week ago.

The past week has proven to be lucrative for Natural Food International Holding investors, so let's see if fundamentals drove the company's three-year performance.

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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 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).

Natural Food International Holding was able to grow its EPS at 27% per year over three years, sending the share price higher. In comparison, the 33% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
SEHK:1837 Earnings Per Share Growth January 6th 2026

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for Natural Food International Holding the TSR over the last 3 years was 168%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Natural Food International Holding has rewarded shareholders with a total shareholder return of 139% in the last twelve months. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 13% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Natural Food International Holding better, we need to consider many other factors. For instance, we've identified 1 warning sign for Natural Food International Holding that you should be aware of.

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