Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. For example, the iRay Technology Company Limited (SHSE:688301) share price is up 23% in the last 1 year, clearly besting the market decline of around 14% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow iRay Technology for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

Since the stock has added CN¥1.3b 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 iRay Technology

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

iRay Technology was able to grow EPS by 60% in the last twelve months. This EPS growth is significantly higher than the 23% increase in the share price. So it seems like the market has cooled on iRay Technology, despite the growth. Interesting. Of course, with a P/E ratio of 66.47, the market remains optimistic.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

iRay Technology boasts a total shareholder return of 23% for the last year (that includes the dividends) . A substantial portion of that gain has come in the last three months, with the stock up 28% in that time. This suggests the company is continuing to win over new investors. 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. Take risks, for example - iRay Technology has 1 warning sign we think you should be aware of.

We will like iRay Technology better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.