It's nice to see the Shenzhen JT Automation Equipment Co.,Ltd (SZSE:300400) share price up 15% in a week. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 57% in that period. So it is really good to see an improvement. While many would remain nervous, there could be further gains if the business can put its best foot forward.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

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 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).

Shenzhen JT Automation EquipmentLtd saw its EPS decline at a compound rate of 33% per year, over the last three years. In comparison the 25% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. This positive sentiment is also reflected in the generous P/E ratio of 71.55.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Shenzhen JT Automation EquipmentLtd's key metrics by checking this interactive graph of Shenzhen JT Automation EquipmentLtd's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Shenzhen JT Automation EquipmentLtd, it has a TSR of -55% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Although it hurts that Shenzhen JT Automation EquipmentLtd returned a loss of 12% in the last twelve months, the broader market was actually worse, returning a loss of 17%. Given the total loss of 1.5% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. It's always interesting to track share price performance over the longer term. But to understand Shenzhen JT Automation EquipmentLtd better, we need to consider many other factors. Take risks, for example - Shenzhen JT Automation EquipmentLtd has 5 warning signs (and 1 which is significant) we think you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.