It might be of some concern to shareholders to see the WuXi AppTec Co., Ltd. (SHSE:603259) share price down 10% in the last month. But over three years, the returns would have left most investors smiling In fact, the company's share price bested the return of its market index in that time, posting a gain of 77%.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for WuXi AppTec

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

WuXi AppTec was able to grow its EPS at 45% per year over three years, sending the share price higher. The average annual share price increase of 21% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock.

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

It is of course excellent to see how WuXi AppTec has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at WuXi AppTec's financial health with this free report on its balance sheet.

A Different Perspective

The last twelve months weren't great for WuXi AppTec shares, which performed worse than the market, costing holders 39%, including dividends. Meanwhile, the broader market slid about 14%, likely weighing on the stock. Fortunately the longer term story is brighter, with total returns averaging about 21% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand WuXi AppTec better, we need to consider many other factors. Take risks, for example - WuXi AppTec has 3 warning signs (and 1 which is significant) we think you should know about.

But note: WuXi AppTec 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.