Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Velocity Financial, Inc. (NYSE:VEL) share price has soared 151% in the last 1 year. Most would be very happy with that, especially in just one year! It's down 1.2% in the last seven days. Velocity Financial hasn't been listed for long, so it's still not clear if it is a long term winner.

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.

Check out our latest analysis for Velocity Financial

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 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.

During the last year Velocity Financial grew its earnings per share, moving from a loss to a profit.

The result looks like a strong improvement to us, so we're not surprised the market likes the growth. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Velocity Financial has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Velocity Financial will grow revenue in the future.

A Different Perspective

Velocity Financial shareholders should be happy with the total gain of 151% over the last twelve months. The more recent returns haven't been as impressive as the longer term returns, coming in at just 1.4%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Velocity Financial better, we need to consider many other factors. For instance, we've identified 1 warning sign for Velocity Financial 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 US exchanges.

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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