When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Zhejiang Huatong Meat Products Co., Ltd. (SZSE:002840) share price has soared 111% in the last 1 year. Most would be very happy with that, especially in just one year! It's also up 38% in about a month. It is also impressive that the stock is up 78% over three years, adding to the sense that it is a real winner.

The past week has proven to be lucrative for Zhejiang Huatong Meat Products investors, so let's see if fundamentals drove the company's one-year performance.

View our latest analysis for Zhejiang Huatong Meat Products

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. 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.

Over the last twelve months Zhejiang Huatong Meat Products went from profitable to unprofitable. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. We might get a clue to explain the share price move by looking to other metrics.

Zhejiang Huatong Meat Products' revenue actually dropped 21% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Zhejiang Huatong Meat Products stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Zhejiang Huatong Meat Products has rewarded shareholders with a total shareholder return of 112% in the last twelve months. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. In the best case scenario, this 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 learn about the 3 warning signs we've spotted with Zhejiang Huatong Meat Products (including 1 which is significant) .

But note: Zhejiang Huatong Meat Products 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 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.