If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the HY Energy Group Co.,Ltd (SHSE:600387) share price is up 25% in the last 1 year, clearly besting the market decline of around 1.2% (not including dividends). That's a solid performance by our standards! However, the longer term returns haven't been so impressive, with the stock up just 4.4% in the last three years.

Since the long term performance has been good but there's been a recent pullback of 9.4%, let's check if the fundamentals match the share price.

Check out our latest analysis for HY Energy GroupLtd

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

HY Energy GroupLtd was able to grow EPS by 230% in the last twelve months. It's fair to say that the share price gain of 25% did not keep pace with the EPS growth. So it seems like the market has cooled on HY Energy GroupLtd, despite the growth. Interesting.

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

Dive deeper into HY Energy GroupLtd's key metrics by checking this interactive graph of HY Energy GroupLtd's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that HY Energy GroupLtd shareholders have received a total shareholder return of 26% over the last year. Of course, that includes the dividend. There's no doubt those recent returns are much better than the TSR loss of 3% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand HY Energy GroupLtd better, we need to consider many other factors. Even so, be aware that HY Energy GroupLtd is showing 1 warning sign in our investment analysis , you should know about...

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 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.