Victory Giant Technology (HuiZhou)Co.Ltd's (SZSE:300476) one-year earnings growth trails the stellar shareholder returns

Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right stock, you can make a lot more than 100%. Take, for example Victory Giant Technology (HuiZhou)Co.,Ltd. (SZSE:300476). Its share price is already up an impressive 245% in the last twelve months. On top of that, the share price is up 18% in about a quarter. It is also impressive that the stock is up 106% over three years, adding to the sense that it is a real winner.

Since the stock has added CN¥1.3b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Victory Giant Technology (HuiZhou)Co.Ltd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Victory Giant Technology (HuiZhou)Co.Ltd was able to grow EPS by 15% in the last twelve months. The share price gain of 245% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 53.44.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Victory Giant Technology (HuiZhou)Co.Ltd has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Victory Giant Technology (HuiZhou)Co.Ltd will grow revenue in the future.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Victory Giant Technology (HuiZhou)Co.Ltd, it has a TSR of 247% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Victory Giant Technology (HuiZhou)Co.Ltd has rewarded shareholders with a total shareholder return of 247% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 22% 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. For example, we've discovered 1 warning sign for Victory Giant Technology (HuiZhou)Co.Ltd that you should be aware of before investing here.

Of course Victory Giant Technology (HuiZhou)Co.Ltd 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.