We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. Take, for example, the Milkyway Chemical Supply Chain Service Co., Ltd. (SHSE:603713) share price, which skyrocketed 324% over three years. Also pleasing for shareholders was the 13% gain in the last three months.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

View our latest analysis for Milkyway Chemical Supply Chain Service

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Milkyway Chemical Supply Chain Service was able to grow its EPS at 43% per year over three years, sending the share price higher. This EPS growth is lower than the 62% average annual increase in the share price. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It's not unusual to see the market 're-rate' a stock, after a few years of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 46.95.

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

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

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Milkyway Chemical Supply Chain Service, it has a TSR of 327% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Pleasingly, Milkyway Chemical Supply Chain Service's total shareholder return last year was 34%. That's including the dividend. That falls short of the 62% it has made, for shareholders, each year, over three years. It's always interesting to track share price performance over the longer term. But to understand Milkyway Chemical Supply Chain Service better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Milkyway Chemical Supply Chain Service you should be aware of, and 1 of them is a bit concerning.

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 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.