One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. For example, Garrett Motion Inc. (NASDAQ:GTX) shareholders have seen the share price rise 30% over three years, well in excess of the market return (23%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 19%.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

Check out our latest analysis for Garrett Motion

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

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

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

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

A Different Perspective

Garrett Motion provided a TSR of 19% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 1.1% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Garrett Motion better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Garrett Motion (at least 2 which are concerning) , and understanding them should be part of your investment process.

We will like Garrett Motion 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.