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By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Shandong Weigao Group Medical Polymer Company Limited (HKG:1066), which is up 59%, over three years, soundly beating the market return of 22% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 29% in the last year, including dividends.
Check out our latest analysis for Shandong Weigao Group Medical Polymer
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Shandong Weigao Group Medical Polymer was able to grow its EPS at 9.8% per year over three years, sending the share price higher. This EPS growth is lower than the 17% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Shandong Weigao Group Medical Polymer has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Shandong Weigao Group Medical Polymer the TSR over the last 3 years was 66%, 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 Shandong Weigao Group Medical Polymer shareholders have received a total shareholder return of 29% over one year. Of course, that includes the dividend. That certainly beats the loss of about 1.2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. Before deciding if you like the current share price, check how Shandong Weigao Group Medical Polymer scores on these 3 valuation metrics.