Tencent Music Entertainment Group’s (NYSE:TME) 115% return outpaced the company’s earnings growth over the same one-year period

Tencent Music Entertainment Group (NYSE:TME) shareholders might be concerned after seeing the share price drop 13% in the last month. But that doesn’t detract from the splendid returns of the last year. Like an eagle, the share price soared 113% in that time. So it is important to view the recent reduction in price through that lense. Only time will tell if there is still too much optimism currently reflected in the share price.

Since it’s been a strong week for Tencent Music Entertainment Group shareholders, let’s have a look at trend of the longer term fundamentals.

See our latest analysis for Tencent Music Entertainment Group

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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.

Tencent Music Entertainment Group was able to grow EPS by 25% in the last twelve months. The share price gain of 113% certainly outpaced the EPS growth. So it’s fair to assume the market has a higher opinion of the business than it a year ago.

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

We know that Tencent Music Entertainment Group has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

We’re pleased to report that Tencent Music Entertainment Group shareholders have received a total shareholder return of 115% over one year. And that does include the dividend. There’s no doubt those recent returns are much better than the TSR loss of 1.0% 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. Before deciding if you like the current share price, check how Tencent Music Entertainment Group scores on these 3 valuation metrics.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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