GuoCheng MiningLTD's (SZSE:000688) 392% YoY earnings expansion surpassed the shareholder returns over the past year

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. For example, the GuoCheng Mining CO.,LTD (SZSE:000688) share price is up 39% in the last 1 year, clearly besting the market return of around 18% (not including dividends). That's a solid performance by our standards! On the other hand, longer term shareholders have had a tougher run, with the stock falling 12% in three years.

Since it's been a strong week for GuoCheng MiningLTD shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for GuoCheng MiningLTD

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 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).

During the last year GuoCheng MiningLTD grew its earnings per share (EPS) by 392%. It's fair to say that the share price gain of 39% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about GuoCheng MiningLTD as it was before. This could be an opportunity. Of course, with a P/E ratio of 116.27, the market remains optimistic.

The image below shows how EPS has 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. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on GuoCheng MiningLTD's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that GuoCheng MiningLTD has rewarded shareholders with a total shareholder return of 39% in the last twelve months. Of course, that includes the dividend. That certainly beats the loss of about 4% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. For example, we've discovered 3 warning signs for GuoCheng MiningLTD (1 shouldn't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.