Hubei Jiuzhiyang Infrared System (SZSE:300516) investors are up 7.3% 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 you can significantly boost your returns by picking above-average stocks. For example, the Hubei Jiuzhiyang Infrared System Co., Ltd (SZSE:300516) share price is up 32% in the last 1 year, clearly besting the market return of around 16% (not including dividends). So that should have shareholders smiling. However, the longer term returns haven't been so impressive, with the stock up just 9.8% in the last three years.

Since it's been a strong week for Hubei Jiuzhiyang Infrared System shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Hubei Jiuzhiyang Infrared System

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).

Over the last twelve months, Hubei Jiuzhiyang Infrared System actually shrank its EPS by 17%.

Given the share price gain, we doubt the market is measuring progress with EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We are skeptical of the suggestion that the 1.0% dividend yield would entice buyers to the stock. Unfortunately Hubei Jiuzhiyang Infrared System's fell 8.4% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Hubei Jiuzhiyang Infrared System stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Hubei Jiuzhiyang Infrared System has rewarded shareholders with a total shareholder return of 33% in the last twelve months. That's including the dividend. That's better than the annualised return of 1.7% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. To that end, you should be aware of the 1 warning sign we've spotted with Hubei Jiuzhiyang Infrared System .

But note: Hubei Jiuzhiyang Infrared System 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.