While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, the Nan Nan Resources Enterprise Limited (HKG:1229) share price is up a whopping 650% in the last 1 year, a handsome return in a single year. It's up an even more impressive 1,019% over the last quarter. Looking back further, the stock price is 269% higher than it was three years ago. We love happy stories like this one. The company should be really proud of that performance!

Since the stock has added HK$521m 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 Nan Nan Resources Enterprise

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 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.

During the last year Nan Nan Resources Enterprise grew its earnings per share (EPS) by 86%. Though we do note extraordinary items affected the bottom line. This EPS growth is significantly lower than the 650% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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. Dive deeper into the earnings by checking this interactive graph of Nan Nan Resources Enterprise's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Nan Nan Resources Enterprise shareholders have received a total shareholder return of 650% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per year), it would seem that the stock's performance has improved in recent times. 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. Case in point: We've spotted 5 warning signs for Nan Nan Resources Enterprise you should be aware of, and 1 of them is potentially serious.

But note: Nan Nan Resources Enterprise may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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