These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Inspur Digital Enterprise Technology Limited (HKG:596) share price is 92% higher than it was a year ago, much better than the market return of around 15% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 10% in the last three years.
Since the stock has added HK$445m 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 Inspur Digital Enterprise Technology
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 the last year Inspur Digital Enterprise Technology grew its earnings per share (EPS) by 84%. This EPS growth is reasonably close to the 92% increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. We don't think its coincidental that the share price is growing at a similar rate to the earnings per share.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Inspur Digital Enterprise Technology has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Inspur Digital Enterprise Technology stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Inspur Digital Enterprise Technology shareholders have received a total shareholder return of 94% over the last year. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Is Inspur Digital Enterprise Technology cheap compared to other companies? These 3 valuation measures might help you decide.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).
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.