The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Chewy, Inc. (NYSE:CHWY). Its share price is already up an impressive 148% in the last twelve months. It’s also up 21% in about a month. But this could be related to good market conditions — stocks in its market are up 12% in the last month. Looking back further, the stock price is 62% higher than it was three years ago.

So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.

We check all companies for important risks. See what we found for Chewy in our free report.

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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.

Chewy boasted truly magnificent EPS growth in the last year. While that particular rate of growth is unlikely to be sustained for long, it is still remarkable. So we’re unsurprised to see the share price gaining ground. We’re real advocates of letting inflection points like this guide our research as stock pickers.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

It’s nice to see that Chewy shareholders have received a total shareholder return of 148% over the last year. That certainly beats the loss of about 1.6% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Before forming an opinion on Chewy you might want to consider these 3 valuation metrics.

We will like Chewy better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 American exchanges.

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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.