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If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Genes Tech Group Holdings Company Limited (HKG:8257) share price is up 26% in the last year, clearly besting than the market return of around -16% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
View our latest analysis for Genes Tech Group Holdings
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...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Genes Tech Group Holdings grew its earnings per share (EPS) by 216%. This EPS growth is significantly higher than the 26% increase in the share price. Therefore, it seems the market isn't as excited about Genes Tech Group Holdings as it was before. This could be an opportunity.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It might be well worthwhile taking a look at our free report on Genes Tech Group Holdings'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. 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 Genes Tech Group Holdings the TSR over the last year was 32%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Genes Tech Group Holdings shareholders have gained 32% over the last year, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 24% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Before forming an opinion on Genes Tech Group Holdings you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.