Buying shares in the best businesses can build meaningful wealth for you and your family. And we've seen some truly amazing gains over the years. Don't believe it? Then look at the Shenzhen RongDa Photosensitive Science & Technology Co., Ltd. (SZSE:300576) share price. It's 505% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 52% in about a quarter. But this could be related to the strong market, which is up 25% in the last three months. It really delights us to see such great share price performance for investors.

Although Shenzhen RongDa Photosensitive Science & Technology has shed CN¥1.5b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Over half a decade, Shenzhen RongDa Photosensitive Science & Technology managed to grow its earnings per share at 22% a year. This EPS growth is slower than the share price growth of 43% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 128.69.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Shenzhen RongDa Photosensitive Science & Technology's TSR for the last 5 years was 510%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Shenzhen RongDa Photosensitive Science & Technology shareholders have received a total shareholder return of 36% over one year. Of course, that includes the dividend. Having said that, the five-year TSR of 44% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Shenzhen RongDa Photosensitive Science & Technology better, we need to consider many other factors. Take risks, for example - Shenzhen RongDa Photosensitive Science & Technology has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

But note: Shenzhen RongDa Photosensitive Science & Technology 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.