Solaria Energía y Medio Ambiente (BME:SLR) delivers shareholders solid 121% return over 1 year, surging 3.1% in the last week alone

Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Solaria Energía y Medio Ambiente, S.A. (BME:SLR) share price has soared 121% return in just a single year. It's also good to see the share price up 70% over the last quarter. The longer term returns have not been as good, with the stock price only 3.3% higher than it was three years ago.

Since the stock has added €64m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 Solaria Energía y Medio Ambiente grew its earnings per share (EPS) by 89%. The share price gain of 121% certainly outpaced the EPS growth. 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).

We know that Solaria Energía y Medio Ambiente has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Solaria Energía y Medio Ambiente will grow revenue in the future.

A Different Perspective

It's nice to see that Solaria Energía y Medio Ambiente shareholders have received a total shareholder return of 121% over the last year. That certainly beats the loss of about 5% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Solaria Energía y Medio Ambiente better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Solaria Energía y Medio Ambiente you should know about.

For those who like to find winning investments this free list of undervalued 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 Spanish 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.