Shenzhen RongDa Photosensitive Science & Technology Co., Ltd. (SZSE:300576) shareholders might be concerned after seeing the share price drop 29% in the last quarter. But that doesn't change the fact that shareholders have received really good returns over the last five years. In fact, the share price is 275% higher today. We think it's more important to dwell on the long term returns than the short term returns. The more important question is whether the stock is too cheap or too expensive today.

The past week has proven to be lucrative for Shenzhen RongDa Photosensitive Science & Technology investors, so let's see if fundamentals drove the company's five-year performance.

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).

Over half a decade, Shenzhen RongDa Photosensitive Science & Technology managed to grow its earnings per share at 19% a year. This EPS growth is slower than the share price growth of 30% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 82.02.

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

Dive deeper into Shenzhen RongDa Photosensitive Science & Technology's key metrics by checking this interactive graph of Shenzhen RongDa Photosensitive Science & 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. We note that for Shenzhen RongDa Photosensitive Science & Technology the TSR over the last 5 years was 279%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Shenzhen RongDa Photosensitive Science & Technology has rewarded shareholders with a total shareholder return of 53% in the last twelve months. That's including the dividend. That's better than the annualised return of 31% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Even so, be aware that Shenzhen RongDa Photosensitive Science & Technology is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

We will like Shenzhen RongDa Photosensitive Science & Technology better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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.