The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the Shenzhen Sunline Tech Co., Ltd. (SZSE:300348) share price is 56% higher than it was a year ago, much better than the market return of around 8.2% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 20% higher than it was three years ago.

Since it's been a strong week for Shenzhen Sunline Tech shareholders, let's have a look at trend of the longer term fundamentals.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

During the last year Shenzhen Sunline Tech grew its earnings per share (EPS) by 85%. It's fair to say that the share price gain of 56% did not keep pace with the EPS growth. So it seems like the market has cooled on Shenzhen Sunline Tech, despite the growth. Interesting. Having said that, the market is still optimistic, given the P/E ratio of 391.95.

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 Shenzhen Sunline Tech has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shenzhen Sunline Tech will grow revenue in the future.

A Different Perspective

It's nice to see that Shenzhen Sunline Tech shareholders have received a total shareholder return of 56% over the last year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 5%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Sunline Tech better, we need to consider many other factors. For instance, we've identified 2 warning signs for Shenzhen Sunline Tech (1 is potentially serious) that you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.