HBIS Company Limited (SZSE:000709) shareholders should be happy to see the share price up 15% in the last quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 12%, which falls well short of the return you could get by buying an index fund.

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

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the five years over which the share price declined, HBIS' earnings per share (EPS) dropped by 12% each year. The share price decline of 3% per year isn't as bad as the EPS decline. The relatively muted share price reaction might be because the market expects the business to turn around.

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

This free interactive report on HBIS' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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, HBIS' TSR for the last 5 years was -1.7%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

HBIS shareholders gained a total return of 0.7% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 0.3% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand HBIS better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for HBIS (of which 1 is concerning!) you should know about.

We will like HBIS better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.