One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. For example, Dalian Insulator Group Co., Ltd (SZSE:002606) shareholders have seen the share price rise 87% over three years, well in excess of the market return (35%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 50% , including dividends .

Since the stock has added CN¥776m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Dalian Insulator Group

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.

Dalian Insulator Group became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.

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

It might be well worthwhile taking a look at our free report on Dalian Insulator Group's earnings, revenue and cash flow.

A Different Perspective

Pleasingly, Dalian Insulator Group's total shareholder return last year was 50%. And yes, that does include the dividend. That gain actually surpasses the 24% TSR it generated (per year) over three years. The improving returns to shareholders suggests the stock is becoming more popular with time. It's always interesting to track share price performance over the longer term. But to understand Dalian Insulator Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Dalian Insulator Group that you should be aware of before investing here.

Of course Dalian Insulator Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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