Jilin Jian Yisheng Pharmaceutical Co., Ltd. (SZSE:002566) shareholders might be concerned after seeing the share price drop 14% in the last week. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. In the last three years the share price is up, 31%: better than the market.

In light of the stock dropping 14% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

View our latest analysis for Jilin Jian Yisheng Pharmaceutical

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

During three years of share price growth, Jilin Jian Yisheng Pharmaceutical achieved compound earnings per share growth of 2.5% per year. This EPS growth is lower than the 9% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

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

Dive deeper into Jilin Jian Yisheng Pharmaceutical's key metrics by checking this interactive graph of Jilin Jian Yisheng Pharmaceutical's earnings, revenue and cash flow.

A Different Perspective

Although it hurts that Jilin Jian Yisheng Pharmaceutical returned a loss of 7.0% in the last twelve months, the broader market was actually worse, returning a loss of 21%. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Jilin Jian Yisheng Pharmaceutical better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Jilin Jian Yisheng Pharmaceutical you should know about.

Of course Jilin Jian Yisheng Pharmaceutical 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 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.