7.0% earnings growth over 5 years has not materialized into gains for Sanxiang Impression (SZSE:000863) shareholders over that period

While it may not be enough for some shareholders, we think it is good to see the Sanxiang Impression Co., Ltd. (SZSE:000863) share price up 15% in a single quarter. But over the last half decade, the stock has not performed well. After all, the share price is down 34% in that time, significantly under-performing the market.

Since Sanxiang Impression has shed CN¥437m 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 Sanxiang Impression

There is no denying that markets are sometimes efficient, but prices do not always reflect 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 unfortunate half decade during which the share price slipped, Sanxiang Impression actually saw its earnings per share (EPS) improve by 41% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

Due to the lack of correlation between the EPS growth and the falling share price, it's worth taking a look at other metrics to try to understand the share price movement.

It could be that the revenue decline of 14% per year is viewed as evidence that Sanxiang Impression is shrinking. That could explain the weak share price.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Sanxiang Impression's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Sanxiang Impression's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Sanxiang Impression's TSR, which was a 18% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

While it's certainly disappointing to see that Sanxiang Impression shares lost 6.6% throughout the year, that wasn't as bad as the market loss of 17%. Given the total loss of 3% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. It's always interesting to track share price performance over the longer term. But to understand Sanxiang Impression better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Sanxiang Impression (at least 1 which is concerning) , and understanding them should be part of your investment process.

But note: Sanxiang Impression may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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