When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right stock, you can make a lot more than 100%. Take, for example Pentamaster International Limited (HKG:1665). Its share price is already up an impressive 114% in the last twelve months. On top of that, the share price is up 46% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Pentamaster International hasn't been listed for long, so it's still not clear if it is a long term winner.
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Pentamaster International was able to grow EPS by 42% in the last twelve months. This EPS growth is significantly lower than the 114% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Pentamaster International has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Pentamaster International stock, you should check out this FREE detailed report on its balance sheet.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Pentamaster International the TSR over the last year was 117%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Pentamaster International shareholders should be happy with the total gain of 117% over the last twelve months , including dividends . A substantial portion of that gain has come in the last three months, with the stock up 46% in that time. This suggests the company is continuing to win over new investors. Before spending more time on Pentamaster International it might be wise to click here to see if insiders have been buying or selling shares.
But note: Pentamaster International may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.