Shenzhen Genvict Technologies (SZSE:002869) sheds 7.6% this week, as yearly returns fall more in line with earnings growth

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. For example, the Shenzhen Genvict Technologies Co., Ltd. (SZSE:002869) share price has soared 110% in the last three years. How nice for those who held the stock! Unfortunately, though, the stock has dropped 7.6% over a week. But this could be related to the soft market, with stocks selling off around 2.5% in the last week.

Since the long term performance has been good but there's been a recent pullback of 7.6%, let's check if the fundamentals match the share price.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Shenzhen Genvict Technologies was able to grow its EPS at 14% per year over three years, sending the share price higher. This EPS growth is lower than the 28% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 85.61.

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

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

A Different Perspective

We're pleased to report that Shenzhen Genvict Technologies shareholders have received a total shareholder return of 41% over one year. Of course, that includes the dividend. There's no doubt those recent returns are much better than the TSR loss of 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. 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. For instance, we've identified 1 warning sign for Shenzhen Genvict Technologies that you should be aware of.

But note: Shenzhen Genvict Technologies 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.