Zhejiang Jiemei Electronic And Technology's (SZSE:002859) earnings trajectory could turn positive as the stock pops 20% this past week

Zhejiang Jiemei Electronic And Technology Co., Ltd. (SZSE:002859) shareholders should be happy to see the share price up 20% in the last week. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 34% in the last three years, significantly under-performing the market.

On a more encouraging note the company has added CN¥1.4b to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

See our latest analysis for Zhejiang Jiemei Electronic And Technology

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years that the share price fell, Zhejiang Jiemei Electronic And Technology's earnings per share (EPS) dropped by 11% each year. This change in EPS is reasonably close to the 13% average annual decrease in the share price. So it seems like sentiment towards the stock hasn't changed all that much over time. Rather, the share price has approximately tracked EPS growth.

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

We know that Zhejiang Jiemei Electronic And Technology has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

While the broader market lost about 6.0% in the twelve months, Zhejiang Jiemei Electronic And Technology shareholders did even worse, losing 27% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.4% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Zhejiang Jiemei Electronic And Technology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Zhejiang Jiemei Electronic And Technology (of which 1 is potentially serious!) you should know about.

We will like Zhejiang Jiemei Electronic And Technology 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.