Megacable Holdings S. A. B. de C. V's (BMV:MEGACPO) 39% return outpaced the company's earnings growth over the same one-year period

If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the Megacable Holdings, S. A. B. de C. V. (BMV:MEGACPO) share price is up 31% in the last 1 year, clearly besting the market return of around 5.9% (not including dividends). That's a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 23% lower than it was three years ago.

The past week has proven to be lucrative for Megacable Holdings S. A. B. de C. V investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Megacable Holdings S. A. B. de C. V

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 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).

Megacable Holdings S. A. B. de C. V was able to grow EPS by 14% in the last twelve months. The share price gain of 31% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago.

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

We know that Megacable Holdings S. A. B. de C. V has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Megacable Holdings S. A. B. de C. V, it has a TSR of 39% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Megacable Holdings S. A. B. de C. V has rewarded shareholders with a total shareholder return of 39% 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 2% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Case in point: We've spotted 3 warning signs for Megacable Holdings S. A. B. de C. V you should be aware of, and 1 of them shouldn't be ignored.

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.