Shanghai Aiko Solar EnergyLtd (SHSE:600732) delivers shareholders impressive 15% CAGR over 5 years, surging 24% in the last week alone

While Shanghai Aiko Solar Energy Co.,Ltd. (SHSE:600732) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 16% in the last quarter. But that doesn't change the fact that the returns over the last five years have been pleasing. Its return of 99% has certainly bested the market return!

Since the stock has added CN¥4.5b 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 Shanghai Aiko Solar EnergyLtd

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. 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.

Shanghai Aiko Solar EnergyLtd's earnings per share are down 6.8% per year, despite strong share price performance over five years.

Essentially, it doesn't seem likely that investors are focused on EPS. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.

In contrast revenue growth of 25% per year is probably viewed as evidence that Shanghai Aiko Solar EnergyLtd is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.

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

This free interactive report on Shanghai Aiko Solar EnergyLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

We've already covered Shanghai Aiko Solar EnergyLtd's share price action, but we should also mention its total shareholder return (TSR). 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. Shanghai Aiko Solar EnergyLtd's TSR of 103% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

Investors in Shanghai Aiko Solar EnergyLtd had a tough year, with a total loss of 7.1%, against a market gain of about 22%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 15% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Even so, be aware that Shanghai Aiko Solar EnergyLtd is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.