Mermaid Maritime (SGX:DU4) delivers shareholders favorable 10% CAGR over 5 years, surging 6.3% in the last week alone

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. To wit, the Mermaid Maritime share price has climbed 64% in five years, easily topping the market return of 27% (ignoring dividends).

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

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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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last half decade, Mermaid Maritime became profitable. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price.

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

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

A Different Perspective

Investors in Mermaid Maritime had a tough year, with a total loss of 35%, against a market gain of about 22%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Mermaid Maritime better, we need to consider many other factors. Take risks, for example - Mermaid Maritime has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.

We will like Mermaid Maritime better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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