Yahoo Finance 360 DigiTech's (NASDAQ:QFIN) earnings growth rate lags the 37% CAGR delivered to shareholders
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. To wit, the 360 DigiTech, Inc. (NASDAQ:QFIN) share price has flown 142% in the last three years. That sort of return is as solid as granite. It's also good to see the share price up 29% over the last quarter.
Since the long term performance has been good but there's been a recent pullback of 3.9%, let's check if the fundamentals match the share price.
See our latest analysis for 360 DigiTech
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. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During three years of share price growth, 360 DigiTech achieved compound earnings per share growth of 12% per year. This EPS growth is lower than the 34% average annual increase in the share price. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. That's not necessarily surprising considering the three-year track record of earnings growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into 360 DigiTech's key metrics by checking this interactive graph of 360 DigiTech's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of 360 DigiTech, it has a TSR of 158% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Pleasingly, 360 DigiTech's total shareholder return last year was 7.5%. And yes, that does include the dividend. The TSR has been even better over three years, coming in at 37% per year. It's always interesting to track share price performance over the longer term. But to understand 360 DigiTech better, we need to consider many other factors. For example, we've discovered 2 warning signs for 360 DigiTech that you should be aware of before investing here.
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 US 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.
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