Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Avenue Supermarts Limited (NSE:DMART) share price is 11% higher than it was a year ago, much better than the market return of around -7.8% (not including dividends) in the same period. That’s a solid performance by our standards! Avenue Supermarts hasn’t been listed for long, so it’s still not clear if it is a long term winner.

View our latest analysis for Avenue Supermarts

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 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 Avenue Supermarts grew its earnings per share (EPS) by 52%. This EPS growth is significantly higher than the 11% increase in the share price. So it seems like the market has cooled on Avenue Supermarts, despite the growth. Interesting.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Avenue Supermarts’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Avenue Supermarts shareholders should be happy with the total gain of 11% over the last twelve months. We regret to report that the share price is down 2.5% over ninety days. Shorter term share price moves often don’t signify much about the business itself. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Avenue Supermarts is not the only stock that insiders are buying. 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 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.