Erbud (WSE:ERB) Shareholders Booked A 44% Gain In The Last Year

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the Erbud S.A. (WSE:ERB) share price is 44% higher than it was a year ago, much better than the market decline of around 0.8% (not including dividends) in the same period. That's a solid performance by our standards! Also impressive, the stock is up 31% over three years, making long term shareholders happy, too.

See our latest analysis for Erbud

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 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.

During the last year Erbud grew its earnings per share (EPS) by 29%. The share price gain of 44% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

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

We know that Erbud has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Erbud will grow revenue in the future.

A Different Perspective

It's nice to see that Erbud shareholders have received a total shareholder return of 44% over the last year. That's better than the annualised return of 4% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Erbud is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning...

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 PL exchanges.

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This article by Simply Wall St is general in nature. 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.
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