Shenzhen Desailly Battery Technology Co., Ltd. (SZSE:000049) shareholders should be happy to see the share price rise of 13% in the last month. However, that doesn’t outweigh the rather unimpressive returns over the last three years. In fact, the share price is down 42% in that period, well below the market return.
Judging by the past week, investor sentiment towards Shenzhen Desai Battery Technology is not positive, so let’s see if there’s a mismatch between the fundamentals and the share price.
Read our latest analysis on Shenzhen Desay Battery Technology
In his essay “The Superinvestors of Graham-and-Doddsville,” Warren Buffett wrote that stock prices don’t always rationally reflect a company’s value. Comparing earnings per share (EPS) and share price trends can help you understand how investor attitudes toward a company have changed over time.
Shenzhen Desailly Battery Technology’s EPS has fallen at a compound annual rate of 18% over the past three years. This change in EPS is fairly close to the average annual decline of the share price, which is 17%. This suggests that despite the disappointment, market sentiment towards the company hasn’t changed much in that time. Instead, the share price has roughly tracked the EPS growth.
You can see below how EPS has changed over time (discover the exact values ​​by clicking on the image).
SZSE:000049 Earnings Per Share Growth July 28, 2024
This free interactive report on Shenzhen Desai Battery Technology’s earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
What about dividends?
It is important to consider the price return, as well as the total shareholder return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It is fair to say that the TSR gives a more complete picture for stocks that pay dividends. We note that Shenzhen Desailly Battery Technology’s TSR for the last 3 years was -33%, which is better than the price return shown above. As such, the dividends paid by the company have boosted its total shareholder return.
A different perspective
While the broader market is down about 19% over the twelve months, Shenzhen Desailly Battery shareholders have done even worse, losing 23% (even including dividends). That being said, it’s inevitable that some stocks will become oversold in a falling market. The key is to keep an eye on fundamental trends. Longer term investors won’t be too upset, as the company has made 5% annually over five years. The recent sell-off could be an opportunity, and it might be worth checking the fundamental data for signs of a long-term growth trend. It’s very interesting to look at share price over the long term as a proxy for business performance. But to gain real insight, you need to consider other information as well. For example, if you take risks, Shenzhen Desailly Battery has 3 warning signs you should know about.
If you like buying stocks with management, then you might just love this free list of companies (hint: many of them are flying under the radar, but have attractive valuations).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on China exchanges.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
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