Jiangsu ChengXing Phosph-Chemicals' (SHSE:600078) five-year earnings growth trails the 9.3% YoY shareholder returns

Stock pickers are generally looking for stocks that will outperform the broader market. And in our experience, buying the right stocks can give your wealth a significant boost. For example, the Jiangsu ChengXing Phosph-Chemicals Co., Ltd. (SHSE:600078) share price is up 54% in the last 5 years, clearly besting the market return of around 16% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 3.7% in the last year, including dividends.

The past week has proven to be lucrative for Jiangsu ChengXing Phosph-Chemicals investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Jiangsu ChengXing Phosph-Chemicals

Given that Jiangsu ChengXing Phosph-Chemicals only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

For the last half decade, Jiangsu ChengXing Phosph-Chemicals can boast revenue growth at a rate of 2.4% per year. Put simply, that growth rate fails to impress. The modest growth is probably broadly reflected in the share price, which is up 9%, per year over 5 years. The business could be one worth watching but we generally prefer faster revenue growth.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

This free interactive report on Jiangsu ChengXing Phosph-Chemicals' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Jiangsu ChengXing Phosph-Chemicals the TSR over the last 5 years was 56%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Jiangsu ChengXing Phosph-Chemicals shareholders are up 3.7% for the year (even including dividends). But that return falls short of the market. On the bright side, the longer term returns (running at about 9% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Jiangsu ChengXing Phosph-Chemicals 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 Jiangsu ChengXing Phosph-Chemicals , and understanding them should be part of your investment process.

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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.