While shareholders of Shijiazhuang Tonhe Electronics TechnologiesLtd (SZSE:300491) are in the red over the last year, underlying earnings have actually grown

It's nice to see the Shijiazhuang Tonhe Electronics Technologies Co.,Ltd. (SZSE:300491) share price up 21% in a week. But in truth the last year hasn't been good for the share price. The cold reality is that the stock has dropped 43% in one year, under-performing the market.

On a more encouraging note the company has added CN¥508m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Check out our latest analysis for Shijiazhuang Tonhe Electronics TechnologiesLtd

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Even though the Shijiazhuang Tonhe Electronics TechnologiesLtd share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

With a low yield of 0.7% we doubt that the dividend influences the share price much. Shijiazhuang Tonhe Electronics TechnologiesLtd managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that Shijiazhuang Tonhe Electronics TechnologiesLtd has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Shijiazhuang Tonhe Electronics TechnologiesLtd stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While the broader market lost about 17% in the twelve months, Shijiazhuang Tonhe Electronics TechnologiesLtd shareholders did even worse, losing 43% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Shijiazhuang Tonhe Electronics TechnologiesLtd better, we need to consider many other factors. For example, we've discovered 3 warning signs for Shijiazhuang Tonhe Electronics TechnologiesLtd (1 is a bit concerning!) that you should be aware of before investing here.

We will like Shijiazhuang Tonhe Electronics TechnologiesLtd better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com