By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. Just take a look at VT Industrial Technology Co.,Ltd (SZSE:300707), which is up 38%, over three years, soundly beating the market return of 29% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 6.4% , including dividends .

Since the stock has added CN¥414m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for VT Industrial TechnologyLtd

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the three years of share price growth, VT Industrial TechnologyLtd actually saw its earnings per share (EPS) drop 5.5% per year.

So we doubt that the market is looking to EPS for its main judge of the company's value. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Languishing at just 0.2%, we doubt the dividend is doing much to prop up the share price. It could be that the revenue growth of 22% per year is viewed as evidence that VT Industrial TechnologyLtd is growing. If the company is being managed for the long term good, today's shareholders might be right to hold on.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're pleased to report that VT Industrial TechnologyLtd rewarded shareholders with a total shareholder return of 6.4% over the last year. And yes, that does include the dividend. The TSR has been even better over three years, coming in at 12% per year. It's always interesting to track share price performance over the longer term. But to understand VT Industrial TechnologyLtd better, we need to consider many other factors. Even so, be aware that VT Industrial TechnologyLtd is showing 3 warning signs in our investment analysis , you should know about...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.