Zhongfu Information Inc. (SZSE:300659) shareholders have seen the share price descend 11% over the month. Looking further back, the stock has generated good profits over five years. It has returned a market beating 100% in that time. While the returns over the last 5 years have been good, we do feel sorry for those shareholders who haven't held shares that long, because the share price is down 52% in the last three years.
Since the long term performance has been good but there's been a recent pullback of 11%, let's check if the fundamentals match the share price.
See our latest analysis for Zhongfu Information
Zhongfu Information wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last 5 years Zhongfu Information saw its revenue grow at 20% per year. Even measured against other revenue-focussed companies, that's a good result. While the compound gain of 15% per year is good, it's not unreasonable given the strong revenue growth. If you think there could be more growth to come, now might be the time to take a close look at Zhongfu Information. Opportunity lies where the market hasn't fully priced growth in the underlying business.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Zhongfu Information's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Zhongfu Information's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Zhongfu Information's TSR of 103% over the last 5 years is better than the share price return.
A Different Perspective
It's good to see that Zhongfu Information has rewarded shareholders with a total shareholder return of 20% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 15% per year), it would seem that the stock's performance has improved in recent times. 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. For instance, we've identified 2 warning signs for Zhongfu Information that you should be aware of.
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 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.