The Changshu Tianyin Electromechanical Co.,Ltd (SZSE:300342) share price has had a bad week, falling 22%. Looking further back, the stock has generated good profits over five years. It has returned a market beating 96% in that time.

Since the long term performance has been good but there's been a recent pullback of 22%, let's check if the fundamentals match the share price.

View our latest analysis for Changshu Tianyin ElectromechanicalLtd

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Changshu Tianyin ElectromechanicalLtd's earnings per share are down 41% per year, despite strong share price performance over five years.

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 3.5% per year is probably viewed as evidence that Changshu Tianyin ElectromechanicalLtd is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About The Total Shareholder Return (TSR)?

We've already covered Changshu Tianyin ElectromechanicalLtd's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Changshu Tianyin ElectromechanicalLtd's TSR of 106% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Changshu Tianyin ElectromechanicalLtd shareholders have received a total shareholder return of 96% over the last year. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Changshu Tianyin ElectromechanicalLtd (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

We will like Changshu Tianyin ElectromechanicalLtd better if we see some big insider buys. While we wait, check out this free list of growing companies 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.

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