By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, the flatexDEGIRO AG (ETR:FTK) share price is up 30% in the last three years, clearly besting the market return of around 7.5% (not including dividends).

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for flatexDEGIRO

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 three years of share price growth, flatexDEGIRO achieved compound earnings per share growth of 71% per year. The average annual share price increase of 9% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.25.

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

We know that flatexDEGIRO 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 flatexDEGIRO stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that flatexDEGIRO shareholders are down 24% for the year. Unfortunately, that's worse than the broader market decline of 0.9%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand flatexDEGIRO better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for flatexDEGIRO you should be aware of.

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 German 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.

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