The 6.8% return this week takes Shanghai Phoenix Enterprise (Group)'s (SHSE:600679) shareholders one-year gains to 25%

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. To wit, the Shanghai Phoenix Enterprise (Group) Co., Ltd. (SHSE:600679) share price is 25% higher than it was a year ago, much better than the market return of around 4.2% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 2.9% in the last three years.

The past week has proven to be lucrative for Shanghai Phoenix Enterprise (Group) investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Shanghai Phoenix Enterprise (Group)

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 the last year Shanghai Phoenix Enterprise (Group) grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

We doubt the modest 0.4% dividend yield is doing much to support the share price. We think that the revenue growth of 28% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Shanghai Phoenix Enterprise (Group)'s earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Shanghai Phoenix Enterprise (Group) shareholders have received a total shareholder return of 25% over one year. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.7% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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 for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Shanghai Phoenix Enterprise (Group) , and understanding them should be part of your investment process.

We will like Shanghai Phoenix Enterprise (Group) 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.

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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.