When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Shandong Yulong Gold Co., Ltd. (SHSE:601028) share price has soared 120% in the last half decade. Most would be very happy with that. Unfortunately, though, the stock has dropped 9.9% over a week. However, this might be related to the overall market decline of 2.0% in a week.

Since the long term performance has been good but there's been a recent pullback of 9.9%, let's check if the fundamentals match the share price.

Check out our latest analysis for Shandong Yulong Gold

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years of share price growth, Shandong Yulong Gold achieved compound earnings per share (EPS) growth of 74% per year. The EPS growth is more impressive than the yearly share price gain of 17% over the same period. So it seems the market isn't so enthusiastic about the stock these days.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Shandong Yulong Gold has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Shandong Yulong Gold stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Shandong Yulong Gold shareholders are down 57% for the year. Unfortunately, that's worse than the broader market decline of 9.8%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 17%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before forming an opinion on Shandong Yulong Gold you might want to consider these 3 valuation metrics.

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.