Investors one-year returns in ELQ (WSE:ELQ) have not grown faster than the company's underlying earnings growth

ELQ S.A. (WSE:ELQ) shareholders have seen the share price descend 16% over the month. Despite this, the stock is a strong performer over the last year, no doubt about that. We're very pleased to report the share price shot up 147% in that time. So we think most shareholders won't be too upset about the recent fall. More important, going forward, is how the business itself is going.

While this past week has detracted from the company's one-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

View our latest analysis for ELQ

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 last year ELQ saw its earnings per share (EPS) increase strongly. We don't think the exact number is a good guide to the sustainable growth rate, but we do think this sort of increase is impressive. We are not surprised the share price is up. Strong growth like this can be evidence of a fundamental inflection point in the business, making it a good time to investigate the stock more closely.

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

We know that ELQ has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on ELQ's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that ELQ shareholders have received a total shareholder return of 147% over one year. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. For example, we've discovered 3 warning signs for ELQ (2 are potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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