These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the CNNC International Limited (HKG:2302) share price is 86% higher than it was a year ago, much better than the market return of around 4.9% (not including dividends) in the same period. So that should have shareholders smiling. Also impressive, the stock is up 65% over three years, making long term shareholders happy, too.
Since the stock has added HK$113m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
View our latest analysis for CNNC International
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
CNNC International was able to grow EPS by 32% in the last twelve months. The share price gain of 86% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.
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 CNNC International's earnings, revenue and cash flow.
A Different Perspective
It's good to see that CNNC International has rewarded shareholders with a total shareholder return of 86% in the last twelve months. That certainly beats the loss of about 2% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. Before forming an opinion on CNNC International you might want to consider these 3 valuation metrics.
We will like CNNC International better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.
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.