While ABIOMED, Inc. (NASDAQ:ABMD) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 23% in the last quarter. But that does not change the realty that the stock's performance has been terrific, over five years. Indeed, the share price is up a whopping 939% in that time. Arguably, the recent fall is to be expected after such a strong rise. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.
We love happy stories like this one. The company should be really proud of that performance!
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 five years of share price growth, ABIOMED achieved compound earnings per share (EPS) growth of 92% per year. The EPS growth is more impressive than the yearly share price gain of 60% over the same period. So it seems the market isn't so enthusiastic about the stock these days. Of course, with a P/E ratio of 51.71, the market remains optimistic.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that ABIOMED has improved its bottom line lately, but is it going to grow revenue? Check if analysts think ABIOMED will grow revenue in the future.
A Different Perspective
ABIOMED shareholders are down 16% for the year, but the market itself is up 9.3%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 60%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on ABIOMED it might be wise to click here to see if insiders have been buying or selling shares.
If you are like me, then you will 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 US exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.