Despite Nanjing High-Tech’s (SHSE:600064) profits trending downwards, its share price rose 4.0%, taking its five-year gain to 2.1%.

It’s worth trying to beat market index fund returns to justify the effort of picking individual stocks, but the main objective is to find enough winners to offset the losers, so you can’t blame long-term investing. Nanjing Hi-Tech Co., Ltd. (SHSE:600064) share price has fallen 18% in five years, leading shareholders to question their decision to hold on to it.

In more positive news, the company has increased its market capitalization by RMB415m in the last seven days, so let’s see if we can find out what caused the five-year loss for shareholders.

Check out our latest analysis for Nanjing High-Tech

While the efficient market hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems and investors are not always rational. Comparing earnings per share (EPS) and share price changes over time can provide a view into how investor attitudes towards a company have changed over time.

During the five-year period that the share price was declining, Nanjing High-Tech’s earnings per share (EPS) fell 2.9% per year. Readers should note that the share price has fallen faster than EPS in this period, at a rate of 4% per year. This suggests that the market has become more cautious towards the business recently. This less-favourable sentiment is reflected in its current P/E ratio of 7.40.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Before buying or selling a stock, we always recommend a close look at historic growth trends, which you can find here.

What about dividends?

It is important to consider the price return as well as the total shareholder return for any given stock. While the price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It is fair to say that the TSR gives a more complete picture for stocks that pay dividends. Coincidentally, Nanjing High-Tech’s TSR for the past 5 years was 2.1%, which exceeds the price return mentioned earlier. So the dividends paid by the company have boosted the share price. total Shareholder returns.

A different perspective

While it hurts that Nanjing Hi-Tech has lost 0.7% over the past 12 months, the broader market has actually done even worse, losing 16%. Longer term investors won’t be as upset, as they’ve made 0.4% annually over five years. In the best case scenario, the last year is just a blip on the road to a brighter future. It’s always interesting to track the long term trends of a share price. But to understand Nanjing Hi-Tech better, there are many other factors to consider, including: A warning sign at Nanjing High Technology Something you should know.

However, please note: Nanjing High-Tech may not be the best stock to buySo, take a look at this free A list of interesting companies with past earnings growth (and future growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on China exchanges.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com