The 12% return this week takes Metals Exploration's (LON:MTL) shareholders five-year gains to 755%

Buying shares in the best businesses can build meaningful wealth for you and your family. And highest quality companies can see their share prices grow by huge amounts. To wit, the Metals Exploration plc (LON:MTL) share price has soared 755% over five years. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 16% over the last quarter. We love happy stories like this one. The company should be really proud of that performance!

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

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years of share price growth, Metals Exploration moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. Indeed, the Metals Exploration share price has gained 396% in three years. Meanwhile, EPS is up 87% per year. This EPS growth is higher than the 71% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This unenthusiastic sentiment is reflected in the stock's reasonably modest P/E ratio of 1.52.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Metals Exploration has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Metals Exploration's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that Metals Exploration shareholders have received a total shareholder return of 38% over one year. However, that falls short of the 54% TSR per annum it has made for shareholders, each year, over five years. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Metals Exploration you should be aware of, and 2 of them are potentially serious.

But note: Metals Exploration 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 British 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.