Optimism for Ningbo Solartron TechnologyLtd (SHSE:688299) has grown this past week, despite one-year decline in earnings

Ningbo Solartron Technology Co.,Ltd. (SHSE:688299) shareholders might be concerned after seeing the share price drop 14% in the last quarter. But that doesn't change the reality that over twelve months the stock has done really well. After all, the share price is up a market-beating 73% in that time.

Since the stock has added CN¥615m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Ningbo Solartron 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 the last year, Ningbo Solartron TechnologyLtd actually saw its earnings per share drop 45%.

So we don't think that investors are paying too much attention to EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We are skeptical of the suggestion that the 0.3% dividend yield would entice buyers to the stock. We think that the revenue growth of 7.8% could have some investors interested. We do see some companies suppress earnings in order to accelerate 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 Ningbo Solartron TechnologyLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Ningbo Solartron TechnologyLtd has rewarded shareholders with a total shareholder return of 74% in the last twelve months. That's including the dividend. That certainly beats the loss of about 8% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Take risks, for example - Ningbo Solartron TechnologyLtd has 3 warning signs (and 1 which is significant) we think you should know about.

We will like Ningbo Solartron TechnologyLtd 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.