Unfortunately, investing is risky – companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the China Yuchai International Limited (NYSE:CYD) share price has soared 137% return in just a single year. In more good news, the share price has risen 28% in thirty days. Also impressive, the stock is up 135% over three years, making long term shareholders happy, too.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

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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.

China Yuchai International was able to grow EPS by 18% in the last twelve months. This EPS growth is significantly lower than the 137% increase in the share price. This indicates that the market is now more optimistic about the stock.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that China Yuchai International has improved its bottom line lately, but is it going to grow revenue? If you’re interested, you could check this free report showing consensus revenue forecasts.

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of China Yuchai International, it has a TSR of 151% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

It’s nice to see that China Yuchai International shareholders have received a total shareholder return of 151% over the last year. And that does include the dividend. That’s better than the annualised return of 15% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 1 warning sign we’ve spotted with China Yuchai International .