The 7.4% return this week takes Nanjing Panda Electronics' (SHSE:600775) shareholders one-year gains to 13%

Nanjing Panda Electronics Company Limited (SHSE:600775) shareholders might be concerned after seeing the share price drop 11% in the last quarter. Taking a longer term view we see the stock is up over one year. In that time, it is up 13%, which isn't bad, but is below the market return of 21%.

Since it's been a strong week for Nanjing Panda Electronics shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Nanjing Panda 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 Nanjing Panda Electronics saw its earnings per share (EPS) drop below zero. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. We might get a clue to explain the share price move by looking to other metrics.

Nanjing Panda Electronics' revenue actually dropped 11% over last year. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Nanjing Panda Electronics' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Nanjing Panda Electronics shareholders are up 13% for the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 2% over half a decade It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Nanjing Panda Electronics (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course Nanjing Panda Electronics 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.

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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.