Shenzhen Kingdom Sci-Tech's (SHSE:600446) one-year earnings growth trails the respectable shareholder returns

Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the Shenzhen Kingdom Sci-Tech Co., Ltd (SHSE:600446) share price is up 39% in the last 1 year, clearly besting the market return of around 20% (not including dividends). So that should have shareholders smiling. Unfortunately the longer term returns are not so good, with the stock falling 7.7% in the last three years.

Since it's been a strong week for Shenzhen Kingdom Sci-Tech shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Shenzhen Kingdom Sci-Tech

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 the last year Shenzhen Kingdom Sci-Tech grew its earnings per share (EPS) by 23%. The share price gain of 39% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 74.97.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Shenzhen Kingdom Sci-Tech has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shenzhen Kingdom Sci-Tech will grow revenue in the future.

A Different Perspective

It's good to see that Shenzhen Kingdom Sci-Tech has rewarded shareholders with a total shareholder return of 40% in the last twelve months. And that does include the dividend. Notably the five-year annualised TSR loss of 4% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Shenzhen Kingdom Sci-Tech better, we need to consider many other factors. For example, we've discovered 1 warning sign for Shenzhen Kingdom Sci-Tech that you should be aware of before investing here.

Of course Shenzhen Kingdom Sci-Tech 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.