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Does Shineco's (NASDAQ:TYHT) Share Price Gain of 91% Match Its Business Performance?

Simply Wall St

The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the Shineco, Inc. (NASDAQ:TYHT) share price is up 91% in the last year, clearly besting the market return of around 34% (not including dividends). That's a solid performance by our standards! On the other hand, longer term shareholders have had a tougher run, with the stock falling 76% in three years.

Check out our latest analysis for Shineco

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the last year Shineco saw its earnings per share (EPS) drop below zero. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. It may be that the company has done well on other metrics.

Unfortunately Shineco's fell 30% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

NasdaqCM:TYHT Income Statement, December 23rd 2019
NasdaqCM:TYHT Income Statement, December 23rd 2019

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's nice to see that Shineco shareholders have gained 91% (in total) over the last year. What is absolutely clear is that is far preferable to the dismal 37% average annual loss suffered over the last three years. It could well be that the business has turned around -- or else regained the confidence of investors. You could get a better understanding of Shineco's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course Shineco may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.