China East Education Holdings Limited (HKG:667) shareholders will doubtless be very grateful to see the share price up 39% in the last month. But that is little comfort to those holding over the last half decade, sitting on a big loss. Indeed, the share price is down 70% in the period. So we're not so sure if the recent bounce should be celebrated. But it could be that the fall was overdone.

The recent uptick of 10% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for China East Education Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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, China East Education Holdings' earnings per share (EPS) dropped by 6.8% each year. This reduction in EPS is less than the 21% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on China East Education Holdings' earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of China East Education Holdings, it has a TSR of -61% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that China East Education Holdings has rewarded shareholders with a total shareholder return of 69% in the last twelve months. That's including the dividend. That certainly beats the loss of about 10% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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 1 warning sign with China East Education Holdings , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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