YanTai LongYuan Power Technology Co., Ltd. (SZSE:300105) shareholders might be concerned after seeing the share price drop 16% in the last month. But don't let that distract from the very nice return generated over three years. To wit, the share price did better than an index fund, climbing 45% during that period.
Since the long term performance has been good but there's been a recent pullback of 14%, let's check if the fundamentals match the share price.
Check out our latest analysis for YanTai LongYuan Power Technology
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).
YanTai LongYuan Power Technology was able to grow its EPS at 36% per year over three years, sending the share price higher. This EPS growth is higher than the 13% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock. Of course, with a P/E ratio of 84.94, the market remains optimistic.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into YanTai LongYuan Power Technology's key metrics by checking this interactive graph of YanTai LongYuan Power Technology's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of YanTai LongYuan Power Technology, it has a TSR of 52% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
While the broader market lost about 21% in the twelve months, YanTai LongYuan Power Technology shareholders did even worse, losing 26% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Take risks, for example - YanTai LongYuan Power Technology has 4 warning signs (and 2 which are concerning) we think 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 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.