The 16% drop in Sitronix Technology Corporation’s (TWSE:8016) share price over the last month may be cause for concern for shareholders. However, the silver lining is that the share price has been rising for five years. Unfortunately, the company’s 68% return is below the market return of 149%. Unfortunately, not all shareholders have held for five years, so spare a thought for those who were caught up in the 36% drop over the past three years. It takes a long time to realize profits.
Last week we saw the company’s five-year earnings loss, but let’s look at the recent trends in the underlying business to see if earnings are in line.
Check out our latest analysis for Sitronix Technology
To paraphrase Benjamin Graham, “In the short run, the market is a voting machine, but in the long run, it’s a weighing machine.” 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 the five years that the share price was growing, Sitronix Technology grew its compound earnings per share (EPS) at 17% per year. This EPS growth rate is higher than the average annual growth rate of the share price, which is 11%. Therefore, we can conclude that the market at large is becoming more cautious towards this stock.
The chart below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
TWSE:8016 Earnings Per Share Growth July 22, 2024
Before buying or selling a stock, we always recommend a close look at historic growth trends, which you can find here.
What about dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It is fair to say that the TSR gives a more complete picture for stocks that pay a dividend. Note that in the case of Sitronix Technology, the TSR for the last 5 years was 155%, which is better than the share price return shown above. Thus, the dividends paid by the company have boosted its total shareholder return.
A different perspective
Sitronix Technology delivered a TSR of 14% over the last 12 months. However, this was below the market average. Looking back over five years, the returns are even better, at 21% per year over that period. Perhaps the share price is just taking a breather while the company executes on its growth strategy. It’s very interesting to look at share price over the long term as a proxy for business performance. However, to gain true insight, you need to consider other information as well. For example, we’ve spotted 1 warning sign for Sitronix Technology that you should be aware of before investing.
Sitronix Technology would become even more attractive if we saw some significant insider buying. While we wait, check out this free list of undervalued stocks (mostly small-cap stocks) that have seen significant, recent insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Taiwan exchanges.
Valuation is complicated, but we can help make it simple.
Check out our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider transactions, financials and more, to find out if Sitronix Technology is potentially overvalued or undervalued.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
Valuation is complicated, but we can help make it simple.
Check out our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider transactions, financials and more, to find out if Sitronix Technology is potentially overvalued or undervalued.
View free analysis
Have something to say about this article? If you have any questions about the content, please contact us directly or email us at editorial-team@simplywallst.com.
