Investors one-year returns in Dazhong Transportation (Group) (SHSE:600611) have not grown faster than the company's underlying earnings growth

Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Dazhong Transportation (Group) Co., Ltd. (SHSE:600611) share price has soared 196% in the last 1 year. Most would be very happy with that, especially in just one year! It's up an even more impressive 228% over the last quarter. Also impressive, the stock is up 186% over three years, making long term shareholders happy, too.

While the stock has fallen 6.9% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for Dazhong Transportation (Group)

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

During the last year Dazhong Transportation (Group) grew its earnings per share (EPS) by 201%. This EPS growth is remarkably close to the 196% increase in the share price. This makes us think the market hasn't really changed its sentiment around the company, in the last year. It makes intuitive sense that the share price and EPS would grow at similar rates.

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

It might be well worthwhile taking a look at our free report on Dazhong Transportation (Group)'s earnings, revenue and cash flow.

A Different Perspective

It's good to see that Dazhong Transportation (Group) has rewarded shareholders with a total shareholder return of 196% in the last twelve months. That's including the dividend. That's better than the annualised return of 20% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Dazhong Transportation (Group) better, we need to consider many other factors. Even so, be aware that Dazhong Transportation (Group) is showing 3 warning signs in our investment analysis , and 2 of those make us uncomfortable...

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.