Eagle Nice (International) Holdings Limited

(

HKG:2368

) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But that doesn't change the fact that the returns over the last five years have been pleasing. Its return of 96% has certainly bested the market return!

Check out our latest analysis is it illegal to euthanize a dog at homefor Eagle Nice (International) Holdings

In his essay

The Superinvestors of Graham-and-Doddsville

Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Over half a decade, Eagle Nice (International) Holdings managed to grow its earnings per share at 34% a year. The EPS growth is more impressive than the yearly share price gain of 14% over the same period. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.26.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

SEHK:2368 Past and Future Earnings, February 2nd 2020

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This

free

interactive report on Eagle Nice (International) Holdings'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

. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Eagle Nice (International) Holdings the TSR over the last 5 years was 194%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the

total

shareholder return.

A Different Perspective

We're pleased to report that Eagle Nice (International) Holdings shareholders have received a total shareholder return of 1.7% over one year. Of course, that includes the dividend. Having said that, the five-year TSR of 24% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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 for instance, the ever-present spectre of investment risk.

We've identified 2 warning signs

with Eagle Nice (International) Holdings

, and understanding them should be part of your investment process.

Story continues

Eagle Nice (International) Holdings is not the only stock insiders are buying. So take a peek at this

free

list of growing companies with insider buying.

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

[email protected]

. 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.

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