YiChang HEC ChangJiang Pharmaceutical (HKG:1558) delivers shareholders respectable 21% CAGR over 3 years, surging 6.7% in the last week alone

By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the YiChang HEC ChangJiang Pharmaceutical Co., Ltd. (HKG:1558) share price is up 77% in the last three years, clearly besting the market decline of around 17% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 17%.

The past week has proven to be lucrative for YiChang HEC ChangJiang Pharmaceutical investors, so let's see if fundamentals drove the company's three-year performance.

See our latest analysis for YiChang HEC ChangJiang Pharmaceutical

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years of share price growth, YiChang HEC ChangJiang Pharmaceutical moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that YiChang HEC ChangJiang Pharmaceutical has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

YiChang HEC ChangJiang Pharmaceutical provided a TSR of 17% over the year. That's fairly close to the broader market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 9% over the last five years. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. It's always interesting to track share price performance over the longer term. But to understand YiChang HEC ChangJiang Pharmaceutical better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with YiChang HEC ChangJiang Pharmaceutical .

Of course YiChang HEC ChangJiang Pharmaceutical may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.