Guangdong TCL Smart Home Appliances Co., Ltd. (SZSE:002668) shareholders have seen the share price descend 12% over the month. On the bright side the returns have been quite good over the last half decade. Its return of 73% has certainly bested the market return!

While the stock has fallen 6.0% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the five years of share price growth, Guangdong TCL Smart Home Appliances moved from a loss to profitability. That would generally be considered a positive, so we'd hope to see the share price to rise.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Guangdong TCL Smart Home Appliances has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Guangdong TCL Smart Home Appliances' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Guangdong TCL Smart Home Appliances has rewarded shareholders with a total shareholder return of 8.8% in the last twelve months. However, that falls short of the 12% TSR per annum it has made for shareholders, each year, over five years. 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. For instance, we've identified 1 warning sign for Guangdong TCL Smart Home Appliances that you should be aware of.

We will like Guangdong TCL Smart Home Appliances better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com