Meinian Onehealth Healthcare Holdings (SZSE:002044) earnings and shareholder returns have been trending downwards for the last five years, but the stock soars 28% this past week

Meinian Onehealth Healthcare Holdings Co., Ltd. (SZSE:002044) shareholders should be happy to see the share price up 28% in the last week. But that doesn't change the fact that the returns over the last half decade have been disappointing. In that time the share price has delivered a rude shock to holders, who find themselves down 64% after a long stretch. So is the recent increase sufficient to restore confidence in the stock? Not yet. But it could be that the fall was overdone.

On a more encouraging note the company has added CN¥3.7b to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

See our latest analysis for Meinian Onehealth Healthcare Holdings

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).

Looking back five years, both Meinian Onehealth Healthcare Holdings' share price and EPS declined; the latter at a rate of 21% per year. Notably, the share price has fallen at 19% per year, fairly close to the change in the EPS. This suggests that market participants have not changed their view of the company all that much. Rather, the share price has approximately tracked EPS growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Meinian Onehealth Healthcare Holdings has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Meinian Onehealth Healthcare Holdings will grow revenue in the future.

A Different Perspective

Meinian Onehealth Healthcare Holdings shareholders are down 36% for the year (even including dividends), but the market itself is up 3.3%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. Before deciding if you like the current share price, check how Meinian Onehealth Healthcare Holdings scores on these 3 valuation metrics.

But note: Meinian Onehealth Healthcare Holdings 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.