Anji Microelectronics Technology (Shanghai) (SHSE:688019) shareholders YoY returns are lagging the company's 8.5% five-year earnings growth

While Anji Microelectronics Technology (Shanghai) Co., Ltd. (SHSE:688019) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 18% in the last quarter. Looking further back, the stock has generated good profits over five years. After all, the share price is up a market-beating 45% in that time.

Although Anji Microelectronics Technology (Shanghai) has shed CN¥1.1b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Anji Microelectronics Technology (Shanghai)

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

During five years of share price growth, Anji Microelectronics Technology (Shanghai) achieved compound earnings per share (EPS) growth of 50% per year. The EPS growth is more impressive than the yearly share price gain of 8% over the same period. So one could conclude that the broader market has become more cautious towards the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Anji Microelectronics Technology (Shanghai) has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Although it hurts that Anji Microelectronics Technology (Shanghai) returned a loss of 4.9% in the last twelve months, the broader market was actually worse, returning a loss of 19%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 8% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Anji Microelectronics Technology (Shanghai) better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Anji Microelectronics Technology (Shanghai) you should know about.

But note: Anji Microelectronics Technology (Shanghai) 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.