Shenzhen Yitoa Intelligent ControlLtd's (SZSE:300131) one-year earnings growth trails the stellar shareholder returns

Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Shenzhen Yitoa Intelligent Control Co.,Ltd. (SZSE:300131) share price has soared 105% return in just a single year. And in the last week the share price has popped 11%. It is also impressive that the stock is up 35% over three years, adding to the sense that it is a real winner.

The past week has proven to be lucrative for Shenzhen Yitoa Intelligent ControlLtd investors, so let's see if fundamentals drove the company's one-year performance.

View our latest analysis for Shenzhen Yitoa Intelligent ControlLtd

Given that Shenzhen Yitoa Intelligent ControlLtd only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last twelve months, Shenzhen Yitoa Intelligent ControlLtd's revenue grew by 11%. That's not great considering the company is losing money. In contrast, the share price took off during the year, gaining 105%. We're happy that investors have made money, though we wonder if the increase will be sustained. We're not so sure that revenue growth is driving the market optimism about 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).

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

A Different Perspective

We're pleased to report that Shenzhen Yitoa Intelligent ControlLtd shareholders have received a total shareholder return of 105% over one year. That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 2 warning signs for Shenzhen Yitoa Intelligent ControlLtd (1 is significant) that you should be aware of.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.