By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the China Daye Non-Ferrous Metals Mining Limited (HKG:661) share price is up 69% in the last three years, clearly besting the market decline of around 14% (not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 7.5% in the last year.
After a strong gain in the past week, it’s worth seeing if longer term returns have been driven by improving fundamentals.
View our latest analysis for China Daye Non-Ferrous Metals Mining
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 way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During three years of share price growth, China Daye Non-Ferrous Metals Mining moved from a loss to profitability. So we would expect a higher share price over the period.
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. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of China Daye Non-Ferrous Metals Mining’s earnings, revenue and cash flow.
A Different Perspective
It’s good to see that China Daye Non-Ferrous Metals Mining has rewarded shareholders with a total shareholder return of 7.5% in the last twelve months. There’s no doubt those recent returns are much better than the TSR loss of 4% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with China Daye Non-Ferrous Metals Mining (including 1 which can’t be ignored) .
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
Valuation is complex, but we’re helping make it simple.
Find out whether China Daye Non-Ferrous Metals Mining is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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