N. Varveris-Moda Bagno (ATH:MODA) delivers shareholders fantastic 92% CAGR over 3 years, surging 15% in the last week alone

We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. One such superstar is N. Varveris-Moda Bagno S.A. (ATH:MODA), which saw its share price soar 606% in three years. Also pleasing for shareholders was the 162% gain in the last three months. Anyone who held for that rewarding ride would probably be keen to talk about it.

Since the stock has added €6.8m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for N. Varveris-Moda Bagno

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 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 three years of share price growth, N. Varveris-Moda Bagno moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

We're pleased to report that N. Varveris-Moda Bagno shareholders have received a total shareholder return of 320% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 42% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Take risks, for example - N. Varveris-Moda Bagno has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Of course N. Varveris-Moda Bagno may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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