By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, Hostelworld Group plc (LON:HSW) shareholders have seen the share price rise 82% over three years, well in excess of the market return (1.0%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 11%.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Hostelworld Group

Hostelworld Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Hostelworld Group's revenue trended up 48% each year over three years. That's well above most pre-profit companies. The share price rise of 22% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Hostelworld Group on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Hostelworld Group's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Hostelworld Group has rewarded shareholders with a total shareholder return of 11% in the last twelve months. That certainly beats the loss of about 1.8% 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. It's always interesting to track share price performance over the longer term. But to understand Hostelworld Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Hostelworld Group you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British 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.