The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the Zhejiang Wanfeng Auto Wheel Co., Ltd. (SZSE:002085) share price has flown 244% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 192% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

Since the stock has added CN¥5.4b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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.

Zhejiang Wanfeng Auto Wheel was able to grow its EPS at 6.7% per year over three years, sending the share price higher. In comparison, the 51% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. That's not necessarily surprising considering the three-year track record of earnings growth. This optimism is also reflected in the fairly generous P/E ratio of 52.16.

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

This free interactive report on Zhejiang Wanfeng Auto Wheel's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Zhejiang Wanfeng Auto Wheel's TSR for the last 3 years was 256%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Zhejiang Wanfeng Auto Wheel has rewarded shareholders with a total shareholder return of 214% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 23% 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. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Wanfeng Auto Wheel better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Zhejiang Wanfeng Auto Wheel (including 2 which are significant) .

But note: Zhejiang Wanfeng Auto Wheel may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.