YanTai Yuancheng Gold Co., Ltd. (SHSE:600766) shareholders have seen the share price descend 23% over the month. But that doesn't displace its brilliant performance over three years. The longer term view reveals that the share price is up 334% in that period. Arguably, the recent fall is to be expected after such a strong rise. The thing to consider is whether there is still too much elation around the company's prospects.
Although YanTai Yuancheng Gold has shed CN¥513m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
During three years of share price growth, YanTai Yuancheng Gold achieved compound earnings per share growth of 17% per year. This EPS growth is lower than the 63% average annual increase in the share price. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It is quite common to see investors become enamoured with a business, after a few years of solid progress.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worthwhile taking a look at our free report on YanTai Yuancheng Gold's earnings, revenue and cash flow.
A Different Perspective
While it's certainly disappointing to see that YanTai Yuancheng Gold shares lost 15% throughout the year, that wasn't as bad as the market loss of 28%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 13% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand YanTai Yuancheng Gold better, we need to consider many other factors. For example, we've discovered 1 warning sign for YanTai Yuancheng Gold that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.