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For many, the main point of investing is to generate higher returns than the overall market. But every investor is virtually certain to have both over-performing and under-performing stocks. So we wouldn't blame long term China Aircraft Leasing Group Holdings Limited (HKG:1848) shareholders for doubting their decision to hold, with the stock down 16% over a half decade. On the other hand the share price has bounced 5.7% over the last week. Less than a week ago China Aircraft Leasing Group Holdings announced its financial results; you can catch up on the most recent data by reading our company report.
View our latest analysis for China Aircraft Leasing Group Holdings
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 the unfortunate half decade during which the share price slipped, China Aircraft Leasing Group Holdings actually saw its earnings per share (EPS) improve by 18% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.
It is unusual to see such modest share price growth in the face of sustained EPS improvements. We can look to other metrics to try to understand the situation better.
The steady dividend doesn't really explain why the share price is down. While it's not completely obvious why the share price is down, a closer look at the company's history might help explain it.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that China Aircraft Leasing Group Holdings has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on China Aircraft Leasing Group Holdings
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for China Aircraft Leasing Group Holdings the TSR over the last 5 years was 11%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!