If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Yorhe Fluid Intelligent Control Co., Ltd. (SZSE:002795) share price is 52% higher than it was a year ago, much better than the market decline of around 1.9% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 12% higher than it was three years ago.

The past week has proven to be lucrative for Yorhe Fluid Intelligent Control investors, so let's see if fundamentals drove the company's one-year performance.

View our latest analysis for Yorhe Fluid Intelligent Control

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year Yorhe Fluid Intelligent Control saw its earnings per share (EPS) drop below zero. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. We might get a clue to explain the share price move by looking to other metrics.

Yorhe Fluid Intelligent Control's revenue actually dropped 14% over last year. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Yorhe Fluid Intelligent Control stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Yorhe Fluid Intelligent Control shareholders have received a total shareholder return of 52% over the last year. That's better than the annualised return of 0.2% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Yorhe Fluid Intelligent Control (1 can't be ignored!) that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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