Qingdao Eastsoft Communication TechnologyLtd (SZSE:300183) investors are up 4.8% in the past week, but earnings have declined over the last year

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Qingdao Eastsoft Communication Technology Co.,Ltd (SZSE:300183) share price is 23% higher than it was a year ago, much better than the market return of around 8.3% (not including dividends) in the same period. That's a solid performance by our standards! However, the longer term returns haven't been so impressive, with the stock up just 2.2% in the last three years.

Since it's been a strong week for Qingdao Eastsoft Communication TechnologyLtd shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Qingdao Eastsoft Communication TechnologyLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Over the last twelve months, Qingdao Eastsoft Communication TechnologyLtd actually shrank its EPS by 43%.

Given the share price gain, we doubt the market is measuring progress with EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We doubt the modest 0.5% dividend yield is doing much to support the share price. We think that the revenue growth of 21% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth.

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

Take a more thorough look at Qingdao Eastsoft Communication TechnologyLtd's financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Qingdao Eastsoft Communication TechnologyLtd has rewarded shareholders with a total shareholder return of 25% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 4% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should learn about the 2 warning signs we've spotted with Qingdao Eastsoft Communication TechnologyLtd (including 1 which is significant) .

Of course Qingdao Eastsoft Communication TechnologyLtd 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.