Earnings growth outpaced the 22% return delivered to Openbase (KOSDAQ:049480) shareholders over the last year

If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Openbase, Inc. (KOSDAQ:049480) share price is 21% higher than it was a year ago, much better than the market return of around 2.8% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! However, the longer term returns haven't been so impressive, with the stock up just 14% in the last three years.

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

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 Openbase grew its earnings per share (EPS) by 36%. This EPS growth is significantly higher than the 21% increase in the share price. Therefore, it seems the market isn't as excited about Openbase as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.72.

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

This free interactive report on Openbase's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Openbase has rewarded shareholders with a total shareholder return of 22% in the last twelve months. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.6% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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 2 warning signs with Openbase , and understanding them should be part of your investment process.

Of course Openbase 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 South Korean 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.