Shanghai Jinqiao Export Processing Zone DevelopmentLtd (SHSE:600639) shareholders have lost 6.5% over 5 years, earnings decline likely the culprit

Shanghai Jinqiao Export Processing Zone Development Co.,Ltd (SHSE:600639) shareholders should be happy to see the share price up 17% in the last month. But if you look at the last five years the returns have not been good. In fact, the share price is down 22%, which falls well short of the return you could get by buying an index fund.

Since Shanghai Jinqiao Export Processing Zone DevelopmentLtd has shed CN¥2.4b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Shanghai Jinqiao Export Processing Zone DevelopmentLtd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).

During the five years over which the share price declined, Shanghai Jinqiao Export Processing Zone DevelopmentLtd's earnings per share (EPS) dropped by 9.1% each year. The share price decline of 5% per year isn't as bad as the EPS decline. So investors might expect EPS to bounce back -- or they may have previously foreseen the EPS decline.

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

This free interactive report on Shanghai Jinqiao Export Processing Zone DevelopmentLtd's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Shanghai Jinqiao Export Processing Zone DevelopmentLtd's TSR for the last 5 years was -6.5%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Shanghai Jinqiao Export Processing Zone DevelopmentLtd shareholders have received a total shareholder return of 2.4% over one year. That's including the dividend. That certainly beats the loss of about 1.3% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Shanghai Jinqiao Export Processing Zone DevelopmentLtd is showing 3 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.