Neuren Pharmaceuticals (ASX:NEU) swells 19% this week, taking three-year gains to 990%

Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. Take, for example, the Neuren Pharmaceuticals Limited (ASX:NEU) share price, which skyrocketed 990% over three years. It's even up 19% in the last week. Anyone who held for that rewarding ride would probably be keen to talk about it.

Since it's been a strong week for Neuren Pharmaceuticals shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Neuren Pharmaceuticals

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During three years of share price growth, Neuren Pharmaceuticals moved from a loss to profitability. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Neuren Pharmaceuticals' earnings, revenue and cash flow.

A Different Perspective

It's good to see that Neuren Pharmaceuticals has rewarded shareholders with a total shareholder return of 68% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 57% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Neuren Pharmaceuticals better, we need to consider many other factors. For example, we've discovered 1 warning sign for Neuren Pharmaceuticals that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.