Shanghai Aiko Solar EnergyLtd (SHSE:600732) rallies 19% this week, taking five-year gains to 128%

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. Long term Shanghai Aiko Solar Energy Co.,Ltd. (SHSE:600732) shareholders would be well aware of this, since the stock is up 123% in five years. And in the last month, the share price has gained 26%. But this could be related to good market conditions -- stocks in its market are up 12% in the last month.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

Check out our latest analysis for Shanghai Aiko Solar EnergyLtd

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years of share price growth, Shanghai Aiko Solar EnergyLtd achieved compound earnings per share (EPS) growth of 18% per year. This EPS growth is remarkably close to the 17% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Rather, the share price has approximately tracked EPS growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Shanghai Aiko Solar EnergyLtd's key metrics by checking this interactive graph of Shanghai Aiko Solar EnergyLtd's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Shanghai Aiko Solar EnergyLtd's total shareholder return (TSR) and its share price return. 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. Dividends have been really beneficial for Shanghai Aiko Solar EnergyLtd shareholders, and that cash payout contributed to why its TSR of 128%, over the last 5 years, is better than the share price return.

A Different Perspective

While the broader market gained around 7.5% in the last year, Shanghai Aiko Solar EnergyLtd shareholders lost 40%. 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 18% 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. It's always interesting to track share price performance over the longer term. But to understand Shanghai Aiko Solar EnergyLtd better, we need to consider many other factors. Take risks, for example - Shanghai Aiko Solar EnergyLtd has 1 warning sign we think you should be aware of.

But note: Shanghai Aiko Solar EnergyLtd 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.