Shannon Semiconductor TechnologyLtd (SZSE:300475) jumps 8.9% this week, though earnings growth is still tracking behind five-year shareholder returns

Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. To wit, the Shannon Semiconductor Technology Co.,Ltd. (SZSE:300475) share price has soared 351% over five years. If that doesn't get you thinking about long term investing, we don't know what will. In more good news, the share price has risen 43% in thirty days. But the price may well have benefitted from a buoyant market, since stocks have gained 21% in the last thirty days.

The past week has proven to be lucrative for Shannon Semiconductor TechnologyLtd investors, so let's see if fundamentals drove the company's five-year performance.

See our latest analysis for Shannon Semiconductor TechnologyLtd

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Shannon Semiconductor TechnologyLtd achieved compound earnings per share (EPS) growth of 50% per year. This EPS growth is higher than the 35% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how Shannon Semiconductor TechnologyLtd has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Shannon Semiconductor TechnologyLtd, it has a TSR of 381% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Shannon Semiconductor TechnologyLtd shareholders have received a total shareholder return of 36% over one year. That's including the dividend. Having said that, the five-year TSR of 37% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Shannon Semiconductor TechnologyLtd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shannon Semiconductor TechnologyLtd , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.