Despite the downward trend in earnings at Newland Digital TechnologyLtd (SZSE:000997) the stock lifts 3.2%, bringing three-year gains to 30%

Newland Digital Technology Co.,Ltd. (SZSE:000997) shareholders have seen the share price descend 15% over the month. But don't let that distract from the very nice return generated over three years. After all, the share price is up a market-beating 23% in that time.

Since the stock has added CN¥537m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Newland Digital TechnologyLtd

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years of share price growth, Newland Digital TechnologyLtd actually saw its earnings per share (EPS) drop 50% per year.

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

We severely doubt anyone is particularly impressed with the modest 2.3% three-year revenue growth rate. So truth be told we can't see an easy explanation for the share price action, but perhaps you can...

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Newland Digital TechnologyLtd, it has a TSR of 30% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Newland Digital TechnologyLtd has rewarded shareholders with a total shareholder return of 4.4% in the last twelve months. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.6% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Newland Digital TechnologyLtd better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Newland Digital TechnologyLtd .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.