Ningbo Kangqiang Electronics' (SZSE:002119) 51% YoY earnings expansion surpassed the shareholder returns over the past year

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Ningbo Kangqiang Electronics Co., Ltd (SZSE:002119) share price is 30% higher than it was a year ago, much better than the market return of around 9.8% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! However, the longer term returns haven't been so impressive, with the stock up just 16% in the last three years.

The past week has proven to be lucrative for Ningbo Kangqiang Electronics investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Ningbo Kangqiang Electronics

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Ningbo Kangqiang Electronics grew its earnings per share (EPS) by 51%. This EPS growth is significantly higher than the 30% increase in the share price. Therefore, it seems the market isn't as excited about Ningbo Kangqiang Electronics as it was before. This could be an opportunity. Having said that, the market is still optimistic, given the P/E ratio of 61.36.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

We're pleased to report that Ningbo Kangqiang Electronics shareholders have received a total shareholder return of 31% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5% 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. Even so, be aware that Ningbo Kangqiang Electronics is showing 1 warning sign in our investment analysis , you should know about...

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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.