Smartfit Escola de Ginástica e Dança (BVMF:SMFT3) pulls back 3.2% this week, but still delivers shareholders notable 41% return over 1 year

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. For example, the Smartfit Escola de Ginástica e Dança S.A. (BVMF:SMFT3) share price is up 41% in the last 1 year, clearly besting the market decline of around 4.1% (not including dividends). That's a solid performance by our standards! Smartfit Escola de Ginástica e Dança hasn't been listed for long, so it's still not clear if it is a long term winner.

In light of the stock dropping 3.2% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

See our latest analysis for Smartfit Escola de Ginástica e Dança

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 the last year Smartfit Escola de Ginástica e Dança grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.

However the year on year revenue growth of 58% would help. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It is of course excellent to see how Smartfit Escola de Ginástica e Dança has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Smartfit Escola de Ginástica e Dança shareholders should be happy with the total gain of 41% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 30% in that time. This suggests the company is continuing to win over new investors. Before forming an opinion on Smartfit Escola de Ginástica e Dança you might want to consider these 3 valuation metrics.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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