Asia-potash International Investment (Guangzhou)Co.Ltd (SZSE:000893) sheds 4.1% this week, as yearly returns fall more in line with earnings growth

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term Asia-potash International Investment (Guangzhou)Co.,Ltd. (SZSE:000893) shareholders would be well aware of this, since the stock is up 243% in five years. On top of that, the share price is up 21% in about a quarter. But this could be related to the strong market, which is up 27% in the last three months.

While the stock has fallen 4.1% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for Asia-potash International Investment (Guangzhou)Co.Ltd

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Over half a decade, Asia-potash International Investment (Guangzhou)Co.Ltd managed to grow its earnings per share at 74% a year. The EPS growth is more impressive than the yearly share price gain of 28% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Asia-potash International Investment (Guangzhou)Co.Ltd's earnings, revenue and cash flow.

A Different Perspective

Investors in Asia-potash International Investment (Guangzhou)Co.Ltd had a tough year, with a total loss of 22%, against a market gain of about 6.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 28%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Asia-potash International Investment (Guangzhou)Co.Ltd is showing 1 warning sign in our investment analysis , you should know about...

Of course Asia-potash International Investment (Guangzhou)Co.Ltd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.