Despite the downward trend in earnings at RBC Bearings (NYSE:RBC) the stock grows 3.6%, bringing three-year gains to 96%

One simple way to benefit from the stock market is to buy an index fund. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, RBC Bearings Incorporated (NYSE:RBC) shareholders have seen the share price rise 96% over three years, well in excess of the market return (54%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 18%.

Since the stock has added US$230m 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 RBC Bearings

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 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).

Over the last three years, RBC Bearings failed to grow earnings per share, which fell 2.0% (annualized).

Based on these numbers, we think that the decline in earnings per share may not be a good representation of how the business has changed over the years. So other metrics may hold the key to understanding what is influencing investors.

It could be that the revenue growth of 26% per year is viewed as evidence that RBC Bearings is growing. If the company is being managed for the long term good, today's shareholders might be right to hold on.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that RBC Bearings has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's good to see that RBC Bearings has rewarded shareholders with a total shareholder return of 18% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 14% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand RBC Bearings better, we need to consider many other factors. For instance, we've identified 2 warning signs for RBC Bearings (1 shouldn't be ignored) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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