By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, Zhejiang Ming Jewelry Co., Ltd. () shareholders have seen the share price rise 63% over three years, well in excess of the market decline (20%, not including dividends).
On the back of a solid 7-day performance, let’s check what role the company’s fundamentals have played in driving long term shareholder returns.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Zhejiang Ming Jewelry became profitable within the last three years. That would generally be considered a positive, so we’d expect the share price to be up.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Zhejiang Ming Jewelry’s key metrics by checking this interactive graph of Zhejiang Ming Jewelry’s .
A Different Perspective
While it’s never nice to take a loss, Zhejiang Ming Jewelry shareholders can take comfort that their trailing twelve month loss of 4.9% wasn’t as bad as the market loss of around 16%. Longer term investors wouldn’t be so upset, since they would have made 2%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. 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. Consider risks, for instance. Every company has them, and we’ve spotted you should know about.
Of course Zhejiang Ming Jewelry may not be the best stock to buy. So you may wish to see this free
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.
Valuation is complex, but we’re helping make it simple.
Find out whether Zhejiang Ming Jewelry is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.