These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. For example, the China National Electric Apparatus Research Institute Co., Ltd. (SHSE:688128) share price is up 50% in the last 1 year, clearly besting the market return of around 2.9% (not including dividends). So that should have shareholders smiling. Looking back further, the stock price is 35% higher than it was three years ago.

Since the stock has added CN¥700m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for China National Electric Apparatus Research Institute

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 China National Electric Apparatus Research Institute grew its earnings per share (EPS) by 20%. This EPS growth is significantly lower than the 50% increase in the share price. This indicates that the market is now more optimistic about the stock.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of China National Electric Apparatus Research Institute, it has a TSR of 52% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Pleasingly, China National Electric Apparatus Research Institute's total shareholder return last year was 52%. And yes, that does include the dividend. That's better than the annualized TSR of 12% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. It's always interesting to track share price performance over the longer term. But to understand China National Electric Apparatus Research Institute better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for China National Electric Apparatus Research Institute (of which 1 is significant!) you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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