Optimism for Wuxi Rural Commercial BankLtd (SHSE:600908) has grown this past week, despite one-year decline in earnings

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Wuxi Rural Commercial Bank Co.,Ltd (SHSE:600908) share price is up 18% in the last 1 year, clearly besting the market return of around 9.2% (not including dividends). So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 5.3% higher than it was three years ago.

The past week has proven to be lucrative for Wuxi Rural Commercial BankLtd investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Wuxi Rural Commercial BankLtd

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 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 the last twelve months, Wuxi Rural Commercial BankLtd actually shrank its EPS by 2.1%.

The mild decline in EPS may be a result of the fact that the company is more focused on other aspects of the business, right now. It makes sense to check some of the other fundamental data for an explanation of the share price rise.

Wuxi Rural Commercial BankLtd's revenue actually dropped 3.5% over last year. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Wuxi Rural Commercial BankLtd stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Wuxi Rural Commercial BankLtd the TSR over the last 1 year was 23%, 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 Wuxi Rural Commercial BankLtd has rewarded shareholders with a total shareholder return of 23% in the last twelve months. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5% per year), it would seem that the stock's performance has improved in recent times. 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. For example, we've discovered 1 warning sign for Wuxi Rural Commercial BankLtd that you should be aware of before investing here.

Of course Wuxi Rural Commercial BankLtd 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.