The five-year shareholder returns and company earnings persist lower as STO ExpressLtd (SZSE:002468) stock falls a further 3.1% in past week

While it may not be enough for some shareholders, we think it is good to see the STO Express Co.,Ltd (SZSE:002468) share price up 16% in a single quarter. But don't envy holders -- looking back over 5 years the returns have been really bad. Indeed, the share price is down 62% in the period. So is the recent increase sufficient to restore confidence in the stock? Not yet. Of course, this could be the start of a turnaround.

If the past week is anything to go by, investor sentiment for STO ExpressLtd isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for STO ExpressLtd

There is no denying that markets are sometimes efficient, but prices do not always reflect 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 five years of share price growth, STO ExpressLtd moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

The modest 0.2% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 16% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

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

STO ExpressLtd is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling STO ExpressLtd stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We regret to report that STO ExpressLtd shareholders are down 19% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 12%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Is STO ExpressLtd cheap compared to other companies? These 3 valuation measures might help you decide.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.