Beijing Bashi Media (SHSE:600386) shareholders notch a 83% return over 1 year, yet earnings have been shrinking

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Beijing Bashi Media Co., Ltd. (SHSE:600386) share price is 82% higher than it was a year ago, much better than the market return of around 21% (not including dividends) in the same period. That's a solid performance by our standards! Having said that, the longer term returns aren't so impressive, with stock gaining just 19% in three years.

Since the stock has added CN¥524m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Beijing Bashi Media

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Over the last twelve months, Beijing Bashi Media actually shrank its EPS by 67%.

So we don't think that investors are paying too much attention to EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We doubt the modest 0.4% dividend yield is doing much to support the share price. However the year on year revenue growth of 6.4% would help. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Beijing Bashi Media's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Beijing Bashi Media shareholders have received a total shareholder return of 83% over one year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 9% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Beijing Bashi Media better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Beijing Bashi Media you should be aware of, and 1 of them makes us a bit uncomfortable.

But note: Beijing Bashi Media 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.