The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Shanghai Lujiazui Finance & Trade Zone Development Co.,Ltd. (SHSE:600663) share price is 22% higher than it was a year ago, much better than the market return of around 1.9% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! However, the stock hasn't done so well in the longer term, with the stock only up 1.9% in three years.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd was able to grow EPS by 18% in the last twelve months. This EPS growth is reasonably close to the 22% increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. It looks like the share price is responding to the EPS.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd has rewarded shareholders with a total shareholder return of 23% in the last twelve months. That's including the dividend. 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. It's always interesting to track share price performance over the longer term. But to understand Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd better, we need to consider many other factors. For instance, we've identified 4 warning signs for Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd (2 are concerning) that you should be aware of.

But note: Shanghai Lujiazui Finance & Trade Zone DevelopmentLtd 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.