Jiangsu AMER New Material's (SZSE:002201) earnings growth rate lags the 12% CAGR delivered to shareholders

Jiangsu AMER New Material Co., Ltd. (SZSE:002201) shareholders might be concerned after seeing the share price drop 12% in the last week. But that doesn't change the fact that the returns over the last five years have been pleasing. Its return of 75% has certainly bested the market return! While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 46% drop, in the last year.

Since the long term performance has been good but there's been a recent pullback of 12%, let's check if the fundamentals match the share price.

Check out our latest analysis for Jiangsu AMER New Material

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).

Over half a decade, Jiangsu AMER New Material managed to grow its earnings per share at 16% a year. This EPS growth is higher than the 12% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. Having said that, the market is still optimistic, given the P/E ratio of 93.55.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Jiangsu AMER New Material's key metrics by checking this interactive graph of Jiangsu AMER New Material's earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 10% in the twelve months, Jiangsu AMER New Material shareholders did even worse, losing 46% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 12%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. To that end, you should be aware of the 1 warning sign we've spotted with Jiangsu AMER New Material .

We will like Jiangsu AMER New Material 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.