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Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. To wit, the GMM Pfaudler Limited (NSE:GMM) share price is 65% higher than it was a year ago, much better than the market return of around -1.0% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow GMM Pfaudler for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

Check out our latest analysis for GMM Pfaudler

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 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).

During the last year GMM Pfaudler grew its earnings per share (EPS) by 19%. The share price gain of 65% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that GMM Pfaudler has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling GMM Pfaudler stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that GMM Pfaudler shareholders have gained 65% over the last year, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 14% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Before forming an opinion on GMM Pfaudler you might want to consider these 3 valuation metrics.

But note: GMM Pfaudler 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 IN exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.