No-one enjoys it when they lose money on a stock. But it can difficult to make money in a declining market. The Tingyi (Cayman Islands) Holding Corp. (HKG:322) is down 27% over three years, but the total shareholder return is -7.0% once you include the dividend. And that total return actually beats the market decline of 16%.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.

View our latest analysis for Tingyi (Cayman Islands) Holding

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the three years that the share price fell, Tingyi (Cayman Islands) Holding’s earnings per share (EPS) dropped by 11% each year. This change in EPS is reasonably close to the 10% average annual decrease in the share price. So it seems like sentiment towards the stock hasn’t changed all that much over time. Rather, the share price has approximately tracked EPS growth.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

This free interactive report on Tingyi (Cayman Islands) Holding’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Tingyi (Cayman Islands) Holding’s TSR for the last 3 years was -7.0%, which exceeds the share price return mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Tingyi (Cayman Islands) Holding shareholders are down 7.7% for the year (even including dividends), but the market itself is up 3.3%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for Tingyi (Cayman Islands) Holding you should know about.

Of course Tingyi (Cayman Islands) Holding may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

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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.