The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the Ermenegildo Zegna N.V. (NYSE:ZGN) share price is up 13% in the last 1 year, clearly besting the market decline of around 18% (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 Ermenegildo Zegna for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

Since it's been a strong week for Ermenegildo Zegna shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Ermenegildo Zegna

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over the last twelve months Ermenegildo Zegna went from profitable to unprofitable. While this may prove temporary, we'd consider it a negative, so we would not have expected to see the share price up. It may be that the company has done well on other metrics.

We are skeptical of the suggestion that the 0.8% dividend yield would entice buyers to the stock. However the year on year revenue growth of 16% would help. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Ermenegildo Zegna stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Ermenegildo Zegna shareholders should be happy with the total gain of 14% over the last twelve months, including dividends. That's better than the more recent three month gain of 2.2%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here