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 Nissin Foods Company Limited (HKG:1475) share price is up 19% in the last year, clearly besting than the market return of around -6.7% (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 Nissin Foods for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.

View our latest analysis for Nissin Foods

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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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the last twelve months, Nissin Foods actually shrank its EPS by 20%. So we don’t think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We think that the revenue growth of 3.3% could have some investors interested. Many businesses do go through a faze where they have to forgo some profits to drive business development, and sometimes its for the best.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

This free interactive report on Nissin Foods’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Nissin Foods shareholders should be happy with the total gain of 21% over the last twelve months, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 14% in that time. This suggests the company is continuing to win over new investors. Is Nissin Foods cheap compared to other companies? These 3 valuation measures might help you decide.

We will like Nissin Foods 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 HK 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.