While Zhejiang Jingxin Pharmaceutical Co., Ltd. (SZSE:002020) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 24% in the last quarter. Looking further back, the stock has generated good profits over five years. After all, the share price is up a market-beating 30% in that time.
The past week has proven to be lucrative for Zhejiang Jingxin Pharmaceutical investors, so let's see if fundamentals drove the company's five-year performance.
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. 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.
During five years of share price growth, Zhejiang Jingxin Pharmaceutical achieved compound earnings per share (EPS) growth of 14% per year. This EPS growth is higher than the 5% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Zhejiang Jingxin Pharmaceutical's key metrics by checking this interactive graph of Zhejiang Jingxin Pharmaceutical's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for Zhejiang Jingxin Pharmaceutical the TSR over the last 5 years was 50%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
The total return of 17% received by Zhejiang Jingxin Pharmaceutical shareholders over the last year isn't far from the market return of -17%. Longer term investors wouldn't be so upset, since they would have made 8%, each year, over five years. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Jingxin Pharmaceutical better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Zhejiang Jingxin Pharmaceutical you should know about.
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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.