Shanghai Fullhan Microelectronics' (SZSE:300613) earnings growth rate lags the 13% CAGR delivered to shareholders

It's been a soft week for Shanghai Fullhan Microelectronics Co., Ltd. (SZSE:300613) shares, which are down 13%. But that doesn't change the fact that the returns over the last five years have been pleasing. After all, the share price is up a market-beating 82% in that time.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Shanghai Fullhan Microelectronics

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 Fullhan Microelectronics achieved compound earnings per share (EPS) growth of 25% per year. The EPS growth is more impressive than the yearly share price gain of 13% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. Of course, with a P/E ratio of 51.77, the market remains optimistic.

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

We know that Shanghai Fullhan Microelectronics has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shanghai Fullhan Microelectronics will grow revenue in the future.

A Different Perspective

It's good to see that Shanghai Fullhan Microelectronics has rewarded shareholders with a total shareholder return of 40% in the last twelve months. That's including the dividend. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Shanghai Fullhan Microelectronics better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Shanghai Fullhan Microelectronics you should know about.

But note: Shanghai Fullhan Microelectronics 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.