By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, Zhejiang Hugeleaf Co.,Ltd. (SHSE:600226) shareholders have seen the share price rise 63% over three years, well in excess of the market decline (14%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 7.7% in the last year.

Although Zhejiang HugeleafLtd has shed CN¥648m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Zhejiang HugeleafLtd

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

Zhejiang HugeleafLtd became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.

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

Dive deeper into Zhejiang HugeleafLtd's key metrics by checking this interactive graph of Zhejiang HugeleafLtd's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Zhejiang HugeleafLtd has rewarded shareholders with a total shareholder return of 7.7% in the last twelve months. Notably the five-year annualised TSR loss of 2% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Zhejiang HugeleafLtd you should be aware of.

Of course Zhejiang HugeleafLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.