NagaCorp's (HKG:3918) 177% YoY earnings expansion surpassed the shareholder returns over the past year

Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. For example, the NagaCorp Ltd. (HKG:3918) share price is up 52% in the last 1 year, clearly besting the market return of around 23% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 31% in the last three years.

The past week has proven to be lucrative for NagaCorp investors, so let's see if fundamentals drove the company's one-year performance.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 NagaCorp grew its earnings per share (EPS) by 177%. This EPS growth is significantly higher than the 52% increase in the share price. So it seems like the market has cooled on NagaCorp, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 10.03.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on NagaCorp's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that NagaCorp shareholders have received a total shareholder return of 54% over the last year. And that does include the dividend. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Even so, be aware that NagaCorp is showing 1 warning sign in our investment analysis , you should know about...

NagaCorp is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.