Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Zhe Jiang Taihua New Material Co., Ltd. (SHSE:603055) share price has soared 109% return in just a single year. And in the last month, the share price has gained 21%. Looking back further, the stock price is 73% higher than it was three years ago.

The past week has proven to be lucrative for Zhe Jiang Taihua New Material investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Zhe Jiang Taihua New Material

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 the last year Zhe Jiang Taihua New Material grew its earnings per share (EPS) by 105%. This EPS growth is remarkably close to the 109% increase in the share price. This makes us think the market hasn't really changed its sentiment around the company, in the last year. It looks like the share price is responding to the EPS.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Zhe Jiang Taihua New Material has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

Pleasingly, Zhe Jiang Taihua New Material's total shareholder return last year was 109%. And yes, that does include the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 21%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 3 warning signs we've spotted with Zhe Jiang Taihua New Material .

We will like Zhe Jiang Taihua New Material better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CN 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.