Investors in Falabella (SNSE:FALABELLA) have seen favorable returns of 50% over the past year

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. For example, the Falabella S.A. (SNSE:FALABELLA) share price is up 50% in the last 1 year, clearly besting the market return of around 16% (not including dividends). That's a solid performance by our standards! Unfortunately the longer term returns are not so good, with the stock falling 11% in the last three years.

So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.

View our latest analysis for Falabella

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Falabella went from making a loss to reporting a profit, in the last year.

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.

Unfortunately Falabella's fell 5.8% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We know that Falabella has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Falabella in this interactive graph of future profit estimates.

A Different Perspective

We're pleased to report that Falabella shareholders have received a total shareholder return of 50% over one year. There's no doubt those recent returns are much better than the TSR loss of 5% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Falabella better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Falabella you should be aware of, and 1 of them is a bit concerning.

But note: Falabella may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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