West African Resources (ASX:WAF) shareholder returns have been enviable, earning 413% in 3 years

Investing can be hard but the potential fo an individual stock to pay off big time inspires us. You won't get it right every time, but when you do, the returns can be truly splendid. One bright shining star stock has been West African Resources Limited (ASX:WAF), which is 413% higher than three years ago. It's even up 10% in the last week.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

View our latest analysis for West African Resources

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

West African Resources became profitable within the last three years. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

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

It is of course excellent to see how West African Resources has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling West African Resources stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that West African Resources shareholders have received a total shareholder return of 30% over the last year. However, that falls short of the 33% TSR per annum it has made for shareholders, each year, over five years. It's always interesting to track share price performance over the longer term. But to understand West African Resources better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for West African Resources (of which 1 can't be ignored!) you should know about.

We will like West African Resources better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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