Shanghai Jin Jiang Online Network Service's (SHSE:600650) one-year total shareholder returns outpace the underlying earnings growth

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Shanghai Jin Jiang Online Network Service Co., Ltd. (SHSE:600650) share price is up 90% in the last 1 year, clearly besting the market return of around 12% (not including dividends). So that should have shareholders smiling. It is also impressive that the stock is up 48% over three years, adding to the sense that it is a real winner.

In light of the stock dropping 6.9% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

View our latest analysis for Shanghai Jin Jiang Online Network Service

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 last year Shanghai Jin Jiang Online Network Service grew its earnings per share (EPS) by 61%. This EPS growth is significantly lower than the 90% increase in the share price. This indicates that the market is now more optimistic about the stock.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Shanghai Jin Jiang Online Network Service's key metrics by checking this interactive graph of Shanghai Jin Jiang Online Network Service's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Shanghai Jin Jiang Online Network Service shareholders have received a total shareholder return of 91% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For example, we've discovered 4 warning signs for Shanghai Jin Jiang Online Network Service (1 is significant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.