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). To wit, the Apollo Hospitals Enterprise Limited (NSE:APOLLOHOSP) share price is 27% higher than it was a year ago, much better than the market return of around 6.2% (not including dividends) in the same period. That's a solid performance by our standards! However, the stock hasn't done so well in the longer term, with the stock only up 14% in three years.

View our latest analysis for Apollo Hospitals Enterprise

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 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.

During the last year Apollo Hospitals Enterprise grew its earnings per share (EPS) by 76%. It's fair to say that the share price gain of 27% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Apollo Hospitals Enterprise as it was before. This could be an opportunity. Having said that, the market is still optimistic, given the P/E ratio of 78.33.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Apollo Hospitals Enterprise has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

What about the Total Shareholder Return (TSR)?

We've already covered Apollo Hospitals Enterprise's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Apollo Hospitals Enterprise's TSR of 27% for the year exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Apollo Hospitals Enterprise shareholders have received a total shareholder return of 27% over the last year. That's including the dividend. That's better than the annualised return of 5.1% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Is Apollo Hospitals Enterprise cheap compared to other companies? These 3 valuation measures might help you decide.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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.