Financiera Independencia. de SOFOM E.N.R (BMV:FINDEP) jumps 13% this week, taking five-year gains to 57%

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And in our experience, buying the right stocks can give your wealth a significant boost. To wit, the Financiera Independencia. de SOFOM E.N.R share price has climbed 57% in five years, easily topping the market return of 25% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 6.3%.

Since the stock has added Mex$310m 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 Financiera Independencia. de SOFOM E.N.R

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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, Financiera Independencia. de SOFOM E.N.R moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Financiera Independencia. de SOFOM E.N.R's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Financiera Independencia. de SOFOM E.N.R has rewarded shareholders with a total shareholder return of 6.3% in the last twelve months. Having said that, the five-year TSR of 9% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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 risks, for instance. Every company has them, and we've spotted 2 warning signs for Financiera Independencia. de SOFOM E.N.R you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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