It hasn't been the best quarter for Kowloon Development Company Limited (HKG:34) shareholders, since the share price has fallen 10% in that time. But that doesn't change the fact that the returns over the last three years have been pleasing. In the last three years the share price is up, 18%: better than the market.
See our latest analysis for Kowloon Development
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. 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 three years of share price growth, Kowloon Development achieved compound earnings per share growth of 42% per year. This EPS growth is higher than the 5.8% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 3.63.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Kowloon Development the TSR over the last 3 years was 49%, 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
It's nice to see that Kowloon Development shareholders have received a total shareholder return of 18% over the last year. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7.4% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before forming an opinion on Kowloon Development you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.