Yangtze Optical Fibre And Cable Limited (HKG:6869) earnings and shareholder returns have been trending downwards for the last five years, but the stock grows 7.0% this past week

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But even the best stock picker will only win with some selections. So we wouldn't blame long term Yangtze Optical Fibre And Cable Joint Stock Limited Company (HKG:6869) shareholders for doubting their decision to hold, with the stock down 46% over a half decade. And we doubt long term believers are the only worried holders, since the stock price has declined 35% over the last twelve months. The falls have accelerated recently, with the share price down 11% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 6.3% in the same timeframe.

While the last five years has been tough for Yangtze Optical Fibre And Cable Limited shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Yangtze Optical Fibre And Cable Limited

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Looking back five years, both Yangtze Optical Fibre And Cable Limited's share price and EPS declined; the latter at a rate of 5.9% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 12% per year, over the period. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 6.20.

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

We know that Yangtze Optical Fibre And Cable Limited has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Yangtze Optical Fibre And Cable Limited will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Yangtze Optical Fibre And Cable Limited the TSR over the last 5 years was -36%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Investors in Yangtze Optical Fibre And Cable Limited had a tough year, with a total loss of 32% (including dividends), against a market gain of about 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Yangtze Optical Fibre And Cable Limited better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Yangtze Optical Fibre And Cable Limited .

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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.