As Chengdu Kanghong Pharmaceutical Group (SZSE:002773) surges 10% this past week, investors may now be noticing the company's five-year earnings growth

Chengdu Kanghong Pharmaceutical Group Co., Ltd (SZSE:002773) shareholders should be happy to see the share price up 21% in the last month. But over the last half decade, the stock has not performed well. In fact, the share price is down 38%, which falls well short of the return you could get by buying an index fund.

While the stock has risen 10% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Chengdu Kanghong Pharmaceutical Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 five years of share price growth, Chengdu Kanghong Pharmaceutical Group moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

We don't think that the 1.8% is big factor in the share price, since it's quite small, as dividends go. Revenue is actually up 5.0% over the time period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

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

It is of course excellent to see how Chengdu Kanghong Pharmaceutical Group has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Chengdu Kanghong Pharmaceutical Group's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Chengdu Kanghong Pharmaceutical Group's TSR for the last 5 years was -35%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Chengdu Kanghong Pharmaceutical Group shareholders have received a total shareholder return of 37% over one year. Of course, that includes the dividend. Notably the five-year annualised TSR loss of 6% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Chengdu Kanghong Pharmaceutical Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Chengdu Kanghong Pharmaceutical Group you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.