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It hasn't been the best quarter for Zhaojin Mining Industry Company Limited (HKG:1818) shareholders, since the share price has fallen 22% in that time. But that doesn't change the fact that the returns over the last five years have been pleasing. It has returned a market beating 61% in that time.
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See our latest analysis for Zhaojin Mining Industry
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 five years of share price growth, Zhaojin Mining Industry actually saw its EPS drop 9.9% per year. This means it's unlikely the market is judging the company based on earnings growth. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.
The modest 0.7% dividend yield is unlikely to be propping up the share price. The revenue growth of 2.6% per year hardly seems impressive. So why is the share price up? It's not immediately obvious to us, but a closer look at the company's progress over time might yield answers.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling Zhaojin Mining Industry stock, you should check out this free report showing analyst profit forecasts.
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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Zhaojin Mining Industry, it has a TSR of 67% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that Zhaojin Mining Industry has rewarded shareholders with a total shareholder return of 2.6% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 11% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Before forming an opinion on Zhaojin Mining Industry you might want to consider these 3 valuation metrics.