By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, Founder Technology Group Co.,Ltd. (SHSE:600601) shareholders have seen the share price rise 19% over three years, well in excess of the market decline (25%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 12% in the last year.

Since the stock has added CN¥2.5b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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).

Founder Technology GroupLtd became profitable within the last three years. So we would expect a higher share price over the period.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Founder Technology GroupLtd's key metrics by checking this interactive graph of Founder Technology GroupLtd's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Founder Technology GroupLtd shareholders have received a total shareholder return of 12% over one year. Notably the five-year annualised TSR loss of 0.8% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Case in point: We've spotted 1 warning sign for Founder Technology GroupLtd you should be aware of.

Of course Founder Technology GroupLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.