Shenzhen Goodix Technology (SHSE:603160) earnings and shareholder returns have been trending downwards for the last five years, but the stock surges 12% this past week

This week we saw the Shenzhen Goodix Technology Co., Ltd. (SHSE:603160) share price climb by 12%. But don't envy holders -- looking back over 5 years the returns have been really bad. The share price has failed to impress anyone , down a sizable 69% during that time. So is the recent increase sufficient to restore confidence in the stock? Not yet. We'd err towards caution given the long term under-performance.

The recent uptick of 12% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Shenzhen Goodix Technology

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 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, Shenzhen Goodix Technology moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

The modest 0.3% dividend yield is unlikely to be guiding the market view of the stock. Arguably, the revenue drop of 11% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that Shenzhen Goodix Technology has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Shenzhen Goodix Technology stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

It's good to see that Shenzhen Goodix Technology has rewarded shareholders with a total shareholder return of 4.2% in the last twelve months. Of course, that includes the dividend. Notably the five-year annualised TSR loss of 11% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. Before deciding if you like the current share price, check how Shenzhen Goodix Technology scores on these 3 valuation metrics.

Of course Shenzhen Goodix Technology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.