For us, stock picking is in large part the hunt for the truly magnificent stocks. Not every pick can be a winner, but when you pick the right stock, you can win big. For example, the Source Energy Services Ltd. (TSE:SHLE) share price is up a whopping 694% in the last three years, a handsome return for long term holders. And in the last month, the share price has gained 28%. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report. Anyone who held for that rewarding ride would probably be keen to talk about it.

The past week has proven to be lucrative for Source Energy Services investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Source Energy Services

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During three years of share price growth, Source Energy Services achieved compound earnings per share growth of 116% per year. We note that the 99% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This suggests that sentiment and expectations have not changed drastically. Au contraire, the share price change has arguably mimicked the EPS growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Source Energy Services has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're pleased to report that Source Energy Services shareholders have received a total shareholder return of 116% over one year. That's better than the annualised return of 51% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 3 warning signs we've spotted with Source Energy Services .