The 17% return this week takes Ultralife's (NASDAQ:ULBI) shareholders one-year gains to 92%
Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the Ultralife Corporation (NASDAQ:ULBI) share price is up 92% in the last 1 year, clearly besting the market return of around 4.9% (not including dividends). So that should have shareholders smiling. Looking back further, the stock price is 50% higher than it was three years ago.
The past week has proven to be lucrative for Ultralife investors, so let's see if fundamentals drove the company's one-year performance.
View our latest analysis for Ultralife
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 Ultralife grew its earnings per share, moving from a loss to a profit.
While it's good to see positive EPS of US$0.16 this year, the loss wasn't too bad last year. We'd argue the positive share price reflects the move to profitability. Some investors scan for companies that have just become profitable, since that's an important business development milestone.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Ultralife's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Ultralife shareholders have received a total shareholder return of 92% over the last year. That gain is better than the annual TSR over five years, which is 0.8%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Even so, be aware that Ultralife is showing 1 warning sign in our investment analysis , you should know about...
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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.
