Tenaz Energy (TSE:TNZ) investors are up 57% in the past week, but earnings have declined over the last three years

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the Tenaz Energy Corp. (TSE:TNZ) share price is 155% higher than it was three years ago. That sort of return is as solid as granite. And in the last month, the share price has gained 62%.

The past week has proven to be lucrative for Tenaz Energy investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Tenaz Energy

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Over the last three years, Tenaz Energy failed to grow earnings per share, which fell 7.3% (annualized).

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

It could be that the revenue growth of 60% per year is viewed as evidence that Tenaz Energy is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that Tenaz Energy has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Tenaz Energy will earn in the future (free profit forecasts).

A Different Perspective

It's good to see that Tenaz Energy has rewarded shareholders with a total shareholder return of 62% in the last twelve months. That's better than the annualised return of 7% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 4 warning signs we've spotted with Tenaz Energy (including 2 which are a bit unpleasant) .

For those who like to find winning investments this free list of undervalued 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 Canadian 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.

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