By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) share price is up 35% in the last three years, clearly besting the market return of around 16% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 18% in the last year.

Since it's been a strong week for ANI Pharmaceuticals shareholders, let's have a look at trend of the longer term fundamentals.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

ANI Pharmaceuticals became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.

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

It is of course excellent to see how ANI Pharmaceuticals has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling ANI Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

ANI Pharmaceuticals shareholders gained a total return of 18% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 2% per year over five year. It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand ANI Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 2 warning signs for ANI Pharmaceuticals that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.