Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Jiangxi Hungpai New Material Co., Ltd. (SHSE:605366) share price had more than doubled in just one year - up 126%. On top of that, the share price is up 80% in about a quarter. Jiangxi Hungpai New Material hasn't been listed for long, so it's still not clear if it is a long term winner.

Since the stock has added CN¥1.5b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Jiangxi Hungpai 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 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).

Jiangxi Hungpai New Material was able to grow EPS by 106% in the last twelve months. We note that the earnings per share growth isn't far from the share price growth (of 126%). That suggests that the market sentiment around the company hasn't changed much over that time. We don't think its coincidental that the share price is growing at a similar rate to the earnings per share.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Jiangxi Hungpai New Material has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

Jiangxi Hungpai New Material boasts a total shareholder return of 128% for the last year (that includes the dividends) . And the share price momentum remains respectable, with a gain of 80% in the last three months. This suggests the company is continuing to win over new investors. It's always interesting to track share price performance over the longer term. But to understand Jiangxi Hungpai New Material better, we need to consider many other factors. Even so, be aware that Jiangxi Hungpai New Material is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

Of course Jiangxi Hungpai New Material may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.