Investing in Dazhong Transportation (Group) (SHSE:600611) a year ago would have delivered you a 167% gain

Dazhong Transportation (Group) Co., Ltd. (SHSE:600611) shareholders might be concerned after seeing the share price drop 12% in the last quarter. Despite this, the stock is a strong performer over the last year, no doubt about that. Like an eagle, the share price soared 165% in that time. So some might not be surprised to see the price retrace some. More important, going forward, is how the business itself is going.

So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.

Check out our latest analysis for Dazhong Transportation (Group)

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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, Dazhong Transportation (Group) actually shrank its EPS by 35%.

So we don't think that investors are paying too much attention to EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 0.6% dividend yield is doing much to support the share price. Unfortunately Dazhong Transportation (Group)'s fell 14% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

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

If you are thinking of buying or selling Dazhong Transportation (Group) stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Dazhong Transportation (Group) shareholders have received a total shareholder return of 167% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% per year), it would seem that the stock's performance has improved in recent times. 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. Even so, be aware that Dazhong Transportation (Group) is showing 4 warning signs in our investment analysis , and 2 of those can't be ignored...

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.