Dongguan Mentech Optical & Magnetic (SZSE:002902) delivers shareholders favorable 19% CAGR over 3 years, surging 8.4% in the last week alone

The last three months have been tough on Dongguan Mentech Optical & Magnetic Co., Ltd. (SZSE:002902) shareholders, who have seen the share price decline a rather worrying 36%. But that doesn't change the fact that the returns over the last three years have been pleasing. In the last three years the share price is up, 70%: better than the market.

The past week has proven to be lucrative for Dongguan Mentech Optical & Magnetic investors, so let's see if fundamentals drove the company's three-year performance.

Check out our latest analysis for Dongguan Mentech Optical & Magnetic

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the three years of share price growth, Dongguan Mentech Optical & Magnetic actually saw its earnings per share (EPS) drop 91% per year.

This means it's unlikely the market is judging the company based on earnings growth. Given this situation, it makes sense to look at other metrics too.

You can only imagine how long term shareholders feel about the declining revenue trend (slipping at 1.5% per year). The only thing that's clear is there is low correlation between Dongguan Mentech Optical & Magnetic's share price and its historic fundamental data. Further research may be required!

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

This free interactive report on Dongguan Mentech Optical & Magnetic's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 15% in the twelve months, Dongguan Mentech Optical & Magnetic shareholders did even worse, losing 41%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Dongguan Mentech Optical & Magnetic better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Dongguan Mentech Optical & Magnetic you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com