The BYD share price (HKG: 1211) increases by 31% and the shareholders stop

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Basically the goal of active stock selection is to find companies, that generate returns above the market average. While active stock selection involves risks (and requires diversification), it can also lead to surpluses, for example in the long term BYD Company Limited (HKG: 1211) Shareholders saw their share price rise 31% in the past half decade, exceeding the market return of around 1.5% (excluding dividends). "data-reactid =" 27 "> Basically, the goal of active stock selection It is about finding companies with a return that is above the market average, and while active stock selection involves risks (and requires diversification), it can too lead to an excess return, for example in the long term BYD Company Limited (HKG: 1211) Shareholders saw their share price rise by 31% in the past half decade, exceeding the market return of around 1.5% (excluding dividends).

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = " Check out our latest BYD analysis "data-reactid =" 28 "> Check out our latest BYD analysis

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In his essay The super investors from Graham-and-Doddsville Warren Buffett described how stock prices do not always rationally reflect a company's value. An imperfect but easy way to examine a company's market perception change is to compare the change in earnings per share (EPS) with price performance. "Data-reactid =" 29 "> In his essay The super investors from Graham-and-Doddsville Warren Buffett described how stock prices do not always rationally reflect a company's value. An imperfect but easy way to assess a company's market perception change is to compare the change in earnings per share (EPS) with price performance.

BYD has managed to increase earnings per share to 37% per year for over half a decade. This EPS growth is above the average annual share price increase of 5.6%. One could conclude that the broader market has become more cautious about the stock.

Earnings per share of the company (over time) are shown in the image below (click to see the exact numbers).

SEHK: 1211 earnings in past and future, January 5, 2020

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Before buying or selling a share, we always recommend an incoming one Investigation of You can find historical growth trends here, "data-reactid =" 44 "> Before buying or selling a share, we always recommend that you carefully examine the historical growth trends available here.

What about dividends?

In addition to measuring the return on shares, investors should also consider the total return on shareholders (TSR). The TSR is a yield calculation that takes into account the value of cash dividends (assuming that a dividend received was reinvested) and the calculated value of discounted capital increases and spin-offs. The TSR probably offers a more comprehensive picture of the return on a share. Coincidentally, BYD's TSR has been 34% in the past 5 years, exceeding the aforementioned return on stock prices. And there is no price for the fact that the dividend payments largely explain the divergence!

Another perspective

<p class = "Canvas-Atom-Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "During the broader market in the US around 14% up BYD shareholders lost 16% last year (even including dividends), and even share prices of good stocks sometimes fall, but we want a company's key metrics to improve before we get too interested in them if it wasn't, the recent sell-off may be an opportunity, so it's worth checking the fundamentals for signs of a long-term growth trend. Decide if you like the current stock price and see how BYD rates it 3 valuation metricsEmagazine.credit-suisse.com/app/art…1007 & lang = DE While the broader market grew by around 14% last year, BYD shareholders (including dividends) declined by 16% If you are too interested in it, you should inform yourself about the fundamental key figures of a company: longer-term investors would not be so annoyed because they would have earned 6.0% every year over five years. Before deciding whether you like the current stock price, check how BYD scores with these 3 valuation metrics.

<p class = "canvas-atom canvas-text MB (1.0em) MB (0) – SM MB (0.8em) – SM" type = "text" content = "But note: BYD may not be the best stock to buy, So take a look free List of interesting companies with past profit growth (and further growth forecast)."data-reactid =" 49 "> Please note the following: BYD may not be the best stock to buy, So take a look free List of interesting companies with past profit growth (and further growth forecast).

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Please note that the market returns mentioned in this article reflect the market weighted average returns on stocks currently traded on HK exchanges."data-reactid =" 50 ">Please note that the market returns mentioned in this article reflect the market weighted average returns on stocks currently traded on HK exchanges.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com, This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading."data-reactid =" 51 ">If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com. This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.