Bavarian Nordic's (CPH:BAVA) underlying earnings growth outpaced the return generated for shareholders over the past year

If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. To wit, the Bavarian Nordic A/S (CPH:BAVA) share price is 17% higher than it was a year ago, much better than the market decline of around 9.6% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 13% in the last three years.

While the stock has fallen 3.2% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for Bavarian Nordic

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

During the last year Bavarian Nordic grew its earnings per share (EPS) by 48%. This EPS growth is significantly higher than the 17% increase in the share price. Therefore, it seems the market isn't as excited about Bavarian Nordic as it was before. This could be an opportunity.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Bavarian Nordic has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Bavarian Nordic's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Bavarian Nordic shareholders have received a total shareholder return of 17% over the last year. That's better than the annualised return of 5% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Bavarian Nordic better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Bavarian Nordic .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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