Even though Ronshine China Holdings (HKG:3301) has lost HK$109m market cap in last 7 days, shareholders are still up 105% over 1 year

It's been a soft week for Ronshine China Holdings Limited (HKG:3301) shares, which are down 13%. On the other hand, over the last twelve months the stock has delivered rather impressive returns. Indeed, the share price is up an impressive 105% in that time. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.

In light of the stock dropping 13% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

View our latest analysis for Ronshine China Holdings

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 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).

Ronshine China Holdings was able to grow EPS by 33% in the last twelve months. We note, however, that extraordinary items have impacted earnings. The share price gain of 105% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on Ronshine China Holdings' earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Ronshine China Holdings shareholders have received a total shareholder return of 105% over the last year. There's no doubt those recent returns are much better than the TSR loss of 14% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Ronshine China Holdings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Ronshine China Holdings (at least 2 which can't be ignored) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.