Xilong Scientific (SZSE:002584) investors are up 13% in the past week, but earnings have declined over the last five years

While Xilong Scientific Co., Ltd. (SZSE:002584) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 25% in the last quarter. On the bright side the returns have been quite good over the last half decade. After all, the share price is up a market-beating 18% in that time.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for Xilong Scientific

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).

Xilong Scientific's earnings per share are down 6.1% per year, despite strong share price performance over five years.

Since the EPS are down strongly, it seems highly unlikely market participants are looking at EPS to value the company. The falling EPS doesn't correlate with the climbing share price, so it's worth taking a look at other metrics.

The modest 0.3% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 15% per year is probably viewed as evidence that Xilong Scientific is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Xilong Scientific's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Xilong Scientific shareholders have received a total shareholder return of 14% over the last year. And that does include the dividend. That's better than the annualised return of 3% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Xilong Scientific better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Xilong Scientific you should be aware of.

Of course Xilong Scientific 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com