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Stock pickers are generally looking for stocks that will outperform the broader market. Buying under-rated businesses is one path to excess returns. To wit, the China Overseas Land & Investment share price has climbed 20% in five years, easily topping the market return of 1.0% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 5.0% in the last year , including dividends .
See our latest analysis for China Overseas Land & Investment
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, China Overseas Land & Investment achieved compound earnings per share (EPS) growth of 6.3% per year. The EPS growth is more impressive than the yearly share price gain of 3.8% over the same period. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.12.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on China Overseas Land & Investment's earnings, revenue and cash flow.
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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for China Overseas Land & Investment the TSR over the last 5 years was 42%, 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
China Overseas Land & Investment's TSR for the year was broadly in line with the market average, at 5.0%. We should note here that the five-year TSR is more impressive, at 7.2% per year. Although the share price growth has slowed, the longer term story points to a business well worth watching. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.