Positive earnings growth hasn't been enough to get Jiangsu Suzhou Rural Commercial Bank (SHSE:603323) shareholders a favorable return over the last five years

While not a mind-blowing move, it is good to see that the Jiangsu Suzhou Rural Commercial Bank Co., Ltd (SHSE:603323) share price has gained 14% in the last three months. But over the last half decade, the stock has not performed well. After all, the share price is down 22% in that time, significantly under-performing the market.

While the stock has risen 6.5% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Jiangsu Suzhou Rural Commercial Bank

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).

While the share price declined over five years, Jiangsu Suzhou Rural Commercial Bank actually managed to increase EPS by an average of 13% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

It's strange to see such muted share price performance despite sustained growth. Perhaps a clue lies in other metrics.

In contrast to the share price, revenue has actually increased by 9.2% a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Jiangsu Suzhou Rural Commercial Bank has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Jiangsu Suzhou Rural Commercial Bank

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Jiangsu Suzhou Rural Commercial Bank the TSR over the last 5 years was -9.0%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Jiangsu Suzhou Rural Commercial Bank shareholders have received a total shareholder return of 8.3% over one year. And that does include the dividend. That certainly beats the loss of about 1.7% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Jiangsu Suzhou Rural Commercial Bank you should know about.

Of course Jiangsu Suzhou Rural Commercial Bank 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.