YuanShengTai Dairy Farm (HKG:1431) sheds HK$127m, company earnings and investor returns have been trending downwards for past three years

It is a pleasure to report that the YuanShengTai Dairy Farm Limited (HKG:1431) is up 43% in the last quarter. But that is small recompense for the exasperating returns over three years. Regrettably, the share price slid 55% in that period. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

With the stock having lost 15% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for YuanShengTai Dairy Farm

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. 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).

During five years of share price growth, YuanShengTai Dairy Farm moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.

We note that, in three years, revenue has actually grown at a 11% annual rate, so that doesn't seem to be a reason to sell shares. This analysis is just perfunctory, but it might be worth researching YuanShengTai Dairy Farm more closely, as sometimes stocks fall unfairly. This could present an opportunity.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's good to see that YuanShengTai Dairy Farm has rewarded shareholders with a total shareholder return of 29% in the last twelve months. Notably the five-year annualised TSR loss of 9% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand YuanShengTai Dairy Farm better, we need to consider many other factors. For instance, we've identified 2 warning signs for YuanShengTai Dairy Farm that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.