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Zuoli Kechuang Micro-finance Company Limited (HKG:6866) shareholders should be happy to see the share price up 14% in the last month. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 65% in that period. So it is really good to see an improvement. While many would remain nervous, there could be further gains if the business can put its best foot forward.
View our latest analysis for Zuoli Kechuang Micro-finance
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...' 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.
Zuoli Kechuang Micro-finance saw its EPS decline at a compound rate of 4.0% per year, over the last three years. The share price decline of 30% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 3.36.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Zuoli Kechuang Micro-finance's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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 Zuoli Kechuang Micro-finance the TSR over the last 3 years was -54%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that Zuoli Kechuang Micro-finance rewarded shareholders with a total shareholder return of 29% over the last year. And yes, that does include the dividend. That certainly beats the loss of about 23% per year over three years. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. Importantly, we haven't analysed Zuoli Kechuang Micro-finance's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.