Wealthink AI-Innovation Capital's (HKG:1140) earnings growth rate lags the 121% return delivered to shareholders

It's been a soft week for Wealthink AI-Innovation Capital Limited (HKG:1140) shares, which are down 10%. But that doesn't change the fact that the returns over the last year have been very strong. During that period, the share price soared a full 121%. So it is important to view the recent reduction in price through that lense. Investors should be wondering whether the business itself has the fundamental value required to continue to drive gains.

In light of the stock dropping 10% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

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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.

Wealthink AI-Innovation Capital was able to grow EPS by 20% in the last twelve months. The share price gain of 121% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Wealthink AI-Innovation Capital's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Wealthink AI-Innovation Capital shareholders have received a total shareholder return of 121% over one year. There's no doubt those recent returns are much better than the TSR loss of 12% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. To that end, you should learn about the 3 warning signs we've spotted with Wealthink AI-Innovation Capital (including 1 which is a bit unpleasant) .

Of course Wealthink AI-Innovation Capital 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 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.