The main aim of stock picking is to find the market-beating stocks. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Fiberhome Telecommunication Technologies Co., Ltd. (SHSE:600498) shareholders for doubting their decision to hold, with the stock down 33% over a half decade. The last week also saw the share price slip down another 5.4%. But this could be related to the soft market, which is down about 7.2% in the same period.

If the past week is anything to go by, investor sentiment for Fiberhome Telecommunication Technologies isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

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. 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 five years over which the share price declined, Fiberhome Telecommunication Technologies' earnings per share (EPS) dropped by 7.9% each year. This change in EPS is remarkably close to the 8% average annual decrease in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. So it's fair to say the share price has been responding to changes in EPS.

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

It is of course excellent to see how Fiberhome Telecommunication Technologies has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Fiberhome Telecommunication Technologies' financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. As it happens, Fiberhome Telecommunication Technologies' TSR for the last 5 years was -31%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Fiberhome Telecommunication Technologies has rewarded shareholders with a total shareholder return of 23% in the last twelve months. Of course, that includes the dividend. Notably the five-year annualised TSR loss of 6% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Fiberhome Telecommunication Technologies better, we need to consider many other factors. For example, we've discovered 2 warning signs for Fiberhome Telecommunication Technologies that you should be aware of before investing here.

Of course Fiberhome Telecommunication Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese 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.