Gokul Refoils & Solvent (NSE:GOKUL) jumps 17% this week, though earnings growth is still tracking behind three-year shareholder returns

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. Take, for example, the Gokul Refoils & Solvent Limited (NSE:GOKUL) share price, which skyrocketed 405% over three years. Better yet, the share price has risen 17% in the last week.

Since it's been a strong week for Gokul Refoils & Solvent shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Gokul Refoils & Solvent

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.

Gokul Refoils & Solvent was able to grow its EPS at 42% per year over three years, sending the share price higher. In comparison, the 72% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

A Different Perspective

It's nice to see that Gokul Refoils & Solvent shareholders have received a total shareholder return of 119% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Gokul Refoils & Solvent better, we need to consider many other factors. For instance, we've identified 3 warning signs for Gokul Refoils & Solvent (1 can't be ignored) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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