Richwave Technology (TWSE:4968) shareholders have been profitable for five years, but those who bought a week ago aren't so lucky.

For shareholders, Rich Wave Technology Co., Ltd. (TWSE:4968) stock has fallen 17% in the last month. But that doesn't take away from its impressive long-term performance (measured over five years). In fact, the stock price has increased by a whopping 420% during this time. So we don't think the recent share price decline means the story is a sad one. The most important thing for a smart investor to consider is whether the underlying business can justify the share price increase. Returns over the past five years have been good, but the share price is down 55% in the past three years, so I feel sorry for shareholders who haven't held the stock that long.

Given that the stock price has declined 12% over the past week, we want to investigate the long-term story and see if the fundamentals are driving the company's five-year positive returns. Masu.

See our latest analysis on RichWave Technology.

To paraphrase Benjamin Graham, in the short term the market is a voting machine, but in the long term it is a weighing machine. One way he looks at how market sentiment has changed over time is to look at the interaction between a company's stock price and his earnings per share (EPS).

Over five years of share price growth, RichWave Technology's EPS actually decreased by 25% per year.

This means the market is unlikely to be valuing the company based on its earnings growth. Earnings per share don't seem to match the share price, so let's look at other metrics instead.

Meanwhile, RichWave Technology's earnings have been growing steadily at a compound rate of 3.1% over the past five years. It's quite possible that management is prioritizing revenue growth over EPS growth at this point.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

this free If you want to investigate the stock further, this interactive report on RichWave Technology's balance sheet strength is a great place to start.

What about total shareholder return (TSR)?

Investors should note that there is a difference between RichWave Technology's total shareholder return (TSR) and share price change. This was explained above. 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 increases and spin-offs. Dividends are very beneficial to Rich Wave Technology shareholders, and that cash dividend contributes to why the company's TSR of 454% over the past five years is better than its share price return.

different perspective

Richwave Technology shareholders are up 24% for the year. However, this was below the market average. Looking back over five years, the return is even better, at 41% per year over five years. This could be a business worth watching, given that it continues to be well received by the market over time. It's always interesting to track stock performance over the long term. However, to better understand RichWave technology, many other factors need to be considered. Still, take note of what RichWave technology shows. 1 warning sign in investment analysis you should know…

If you want to buy stocks with management, you might like this free List of companies. (Hint: Insiders are buying them).

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

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.