The one-year returns for China Resources Medical Holdings' (HKG:1515) shareholders have been respectable, yet its earnings growth was even better

A diverse portfolio of stocks will always have winners and losers. Of course, the aim of the game is to pick stocks that do better than an index fund. China Resources Medical Holdings Company Limited (HKG:1515) has done well over the last year, with the stock price up 42% beating the market return of 40% (not including dividends). On the other hand, longer term shareholders have had a tougher run, with the stock falling 10.0% in three years.

The past week has proven to be lucrative for China Resources Medical Holdings investors, so let's see if fundamentals drove the company's one-year performance.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year China Resources Medical Holdings grew its earnings per share (EPS) by 120%. It's fair to say that the share price gain of 42% did not keep pace with the EPS growth. So it seems like the market has cooled on China Resources Medical Holdings, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.25.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that China Resources Medical Holdings has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, China Resources Medical Holdings' TSR for the last 1 year was 48%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

China Resources Medical Holdings provided a TSR of 48% over the year (including dividends). That's fairly close to the broader market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 1.6%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for China Resources Medical Holdings. 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. Take risks, for example - China Resources Medical Holdings has 1 warning sign we think you should be aware of.

But note: China Resources Medical Holdings 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 Hong Kong 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.