If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the Despegar.com, Corp. (NYSE:DESP) share price is up 91% in the last 1 year, clearly besting the market return of around 17% (not including dividends). So that should have shareholders smiling. In contrast, the longer term returns are negative, since the share price is 27% lower than it was three years ago.

Since the stock has added US$65m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Despegar.com

Given that Despegar.com didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Despegar.com grew its revenue by 25% last year. We respect that sort of growth, no doubt. Buyers pushed the share price 91% in response, which isn't unreasonable. If the company can maintain the revenue growth, the share price could go higher still. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Despegar.com's financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Despegar.com has rewarded shareholders with a total shareholder return of 91% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 5% per year over five years. 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. You could get a better understanding of Despegar.com's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

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 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.