Foodlink A.E (ATH:FOODL) jumps 10% this week, though earnings growth is still tracking behind one-year shareholder returns

Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Foodlink A.E. (ATH:FOODL) share price has soared 259% in the last 1 year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 69% over the last quarter. And shareholders have also done well over the long term, with an increase of 211% in the last three years.

Since the stock has added €4.2m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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

During the last year Foodlink A.E grew its earnings per share (EPS) by 70%. This EPS growth is significantly lower than the 259% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago. The fairly generous P/E ratio of 45.23 also points to this optimism.

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

It might be well worthwhile taking a look at our free report on Foodlink A.E's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Foodlink A.E shareholders have received a total shareholder return of 259% over the last year. That's better than the annualised return of 34% 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Foodlink A.E (at least 2 which are concerning) , and understanding them should be part of your investment process.

But note: Foodlink A.E 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 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.