For us, stock picking is in large part the hunt for the truly magnificent stocks. Not every pick can be a winner, but when you pick the right stock, you can win big. For example, the Donnelley Financial Solutions, Inc. (NYSE:DFIN) share price is up a whopping 632% in the last three years, a handsome return for long term holders. And in the last month, the share price has gained 20%. Anyone who held for that rewarding ride would probably be keen to talk about it.

The past week has proven to be lucrative for Donnelley Financial Solutions investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Donnelley Financial Solutions

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Donnelley Financial Solutions was able to grow its EPS at 47% per year over three years, sending the share price higher. This EPS growth is lower than the 94% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

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

It is of course excellent to see how Donnelley Financial Solutions has grown profits over the years, but the future is more important for shareholders. This free interactive report on Donnelley Financial Solutions' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Donnelley Financial Solutions has rewarded shareholders with a total shareholder return of 43% in the last twelve months. That's better than the annualised return of 19% 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 learn about the 3 warning signs we've spotted with Donnelley Financial Solutions (including 1 which is concerning) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.