If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the World Acceptance Corporation (NASDAQ:WRLD) share price is up 77% in the last 1 year, clearly besting the market return of around 31% (not including dividends). So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 5.4% higher than it was three years ago.

The past week has proven to be lucrative for World Acceptance investors, so let's see if fundamentals drove the company's one-year performance.

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.

During the last year World Acceptance grew its earnings per share (EPS) by 348%. This EPS growth is significantly higher than the 77% increase in the share price. Therefore, it seems the market isn't as excited about World Acceptance as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.78.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on World Acceptance's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that World Acceptance shareholders have received a total shareholder return of 77% over the last year. That's better than the annualised return of 3% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with World Acceptance .

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 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.