As Lanzhou Lishang Guochao Industrial GroupLtd (SHSE:600738) jumps 13% this past week, investors may now be noticing the company's one-year earnings growth

Lanzhou Lishang Guochao Industrial Group Co.,Ltd (SHSE:600738) shareholders will doubtless be very grateful to see the share price up 55% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 11% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added CN¥441m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Check out our latest analysis for Lanzhou Lishang Guochao Industrial GroupLtd

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Even though the Lanzhou Lishang Guochao Industrial GroupLtd share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

Given the yield is quite low, at 0.8%, we doubt the dividend can shed much light on the share price. In contrast, the 15% drop in revenue is a real concern. If the market sees the weak revenue as jeopardising EPS, that could explain the lower share price.

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

We know that Lanzhou Lishang Guochao Industrial GroupLtd has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Lanzhou Lishang Guochao Industrial GroupLtd

A Different Perspective

Investors in Lanzhou Lishang Guochao Industrial GroupLtd had a tough year, with a total loss of 10% (including dividends), against a market gain of about 4.9%. 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. Longer term investors wouldn't be so upset, since they would have made 1.9%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Lanzhou Lishang Guochao Industrial GroupLtd that you should be aware of before investing here.

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 Chinese 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.