Shanghai BOCHU Electronic Technology Corporation Limited. (SHSE:688188) shareholders might be concerned after seeing the share price drop 12% in the last month. But that doesn't change the fact that the returns over the last five years have been very strong. We think most investors would be happy with the 203% return, over that period. We think it's more important to dwell on the long term returns than the short term returns. The more important question is whether the stock is too cheap or too expensive today.

Although Shanghai BOCHU Electronic Technology has shed CN¥3.2b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During five years of share price growth, Shanghai BOCHU Electronic Technology achieved compound earnings per share (EPS) growth of 25% per year. This EPS growth is remarkably close to the 25% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Indeed, it would appear the share price is reacting to the EPS.

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

We know that Shanghai BOCHU Electronic Technology has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shanghai BOCHU Electronic Technology will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Shanghai BOCHU Electronic Technology the TSR over the last 5 years was 213%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Shanghai BOCHU Electronic Technology has rewarded shareholders with a total shareholder return of 19% in the last twelve months. That's including the dividend. Having said that, the five-year TSR of 26% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Shanghai BOCHU Electronic Technology better, we need to consider many other factors. For instance, we've identified 1 warning sign for Shanghai BOCHU Electronic Technology that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.