Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Not every pick can be a winner, but when you pick the right stock, you can win big. One such superstar is Ranhill Utilities Berhad (KLSE:RANHILL), which saw its share price soar 391% in three years. On top of that, the share price is up 36% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

So let’s assess the underlying fundamentals over the last 3 years and see if they’ve moved in lock-step with shareholder returns.

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To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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.

Ranhill Utilities Berhad was able to grow its EPS at 20% per year over three years, sending the share price higher. This EPS growth is lower than the 70% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That’s not necessarily surprising considering the three-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 47.27.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

We’d be remiss not to mention the difference between Ranhill Utilities Berhad’s total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Ranhill Utilities Berhad’s TSR of 427% over the last 3 years is better than the share price return.

We’re pleased to report that Ranhill Utilities Berhad shareholders have received a total shareholder return of 50% over one year. That gain is better than the annual TSR over five years, which is 19%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 1 warning sign with Ranhill Utilities Berhad , and understanding them should be part of your investment process.