Volatility 101: Should Tsingtao Brewery (HKG:168) Shares Have Dropped 22%?
Tsingtao Brewery Company Limited (HKG:168) shareholders should be happy to see the share price up 26% in the last week. But if you look at the last five years the returns have not been good. In fact, the share price is down 22%, which falls well short of the return you could get by buying an index fund.
View our latest analysis for Tsingtao Brewery
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.
Looking back five years, both Tsingtao Brewery's share price and EPS declined; the latter at a rate of 1.4% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 5.0% per year, over the period. So it seems the market was too confident about the business, in the past.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Tsingtao Brewery's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Tsingtao Brewery, it has a TSR of -17% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Tsingtao Brewery shareholders have received a total shareholder return of 3.1% over the last year. That's including the dividend. That certainly beats the loss of about 3.8% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Tsingtao Brewery better, we need to consider many other factors. Take risks, for example - Tsingtao Brewery has 1 warning sign we think you should be aware of.
Of course Tsingtao Brewery may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
