While shareholders of Zhejiang Sunriver Culture TourismLtd (SHSE:600576) are in the black over 5 years, those who bought a week ago aren't so fortunate

When we invest, we're generally looking for stocks that outperform the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, the Zhejiang Sunriver Culture Tourism Co.,Ltd. (SHSE:600576) share price is up 78% in the last 5 years, clearly besting the market return of around 7.3% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 34%.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Zhejiang Sunriver Culture TourismLtd

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 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.

During the last half decade, Zhejiang Sunriver Culture TourismLtd became profitable. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. Indeed, the Zhejiang Sunriver Culture TourismLtd share price has gained 36% in three years. During the same period, EPS grew by 39% each year. This EPS growth is higher than the 11% average annual increase in the share price over the same three years. Therefore, it seems the market has moderated its expectations for growth, somewhat. Of course, with a P/E ratio of 60.00, the market remains optimistic.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Zhejiang Sunriver Culture TourismLtd's key metrics by checking this interactive graph of Zhejiang Sunriver Culture TourismLtd's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Zhejiang Sunriver Culture TourismLtd shareholders have received a total shareholder return of 34% over one year. That's better than the annualised return of 12% 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. 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. Take risks, for example - Zhejiang Sunriver Culture TourismLtd has 1 warning sign we think you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.