While shareholders of Shuangliang Eco-Energy SystemsLtd (SHSE:600481) are in the black over 5 years, those who bought a week ago aren't so fortunate

It hasn't been the best quarter for Shuangliang Eco-Energy Systems Co.,Ltd (SHSE:600481) shareholders, since the share price has fallen 17% in that time. Looking further back, the stock has generated good profits over five years. After all, the share price is up a market-beating 73% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 31% drop, in the last year.

In light of the stock dropping 4.0% 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 five-year return.

Check out our latest analysis for Shuangliang Eco-Energy SystemsLtd

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 half a decade, Shuangliang Eco-Energy SystemsLtd managed to grow its earnings per share at 13% a year. So the EPS growth rate is rather close to the annualized share price gain of 12% per year. This indicates that investor sentiment towards the company has not changed a great deal. Indeed, it would appear the share price is reacting to the EPS.

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

It might be well worthwhile taking a look at our free report on Shuangliang Eco-Energy SystemsLtd's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Shuangliang Eco-Energy SystemsLtd's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Shuangliang Eco-Energy SystemsLtd's TSR of 93% over the last 5 years is better than the share price return.

A Different Perspective

Investors in Shuangliang Eco-Energy SystemsLtd had a tough year, with a total loss of 30%, against a market gain of about 18%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 - Shuangliang Eco-Energy SystemsLtd has 2 warning signs (and 1 which is potentially serious) we think you should know about.

But note: Shuangliang Eco-Energy SystemsLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.