Advertisement
U.S. markets close in 6 hours 23 minutes
  • S&P 500

    5,247.33
    -1.16 (-0.02%)
     
  • Dow 30

    39,782.86
    +22.78 (+0.06%)
     
  • Nasdaq

    16,367.99
    -31.53 (-0.19%)
     
  • Russell 2000

    2,114.35
    +44.19 (+2.13%)
     
  • Crude Oil

    82.44
    +1.09 (+1.34%)
     
  • Gold

    2,230.70
    +18.00 (+0.81%)
     
  • Silver

    24.73
    -0.02 (-0.09%)
     
  • EUR/USD

    1.0812
    -0.0018 (-0.16%)
     
  • 10-Yr Bond

    4.2200
    +0.0240 (+0.57%)
     
  • dólar/libra

    1.2639
    +0.0001 (+0.01%)
     
  • USD/JPY

    151.3070
    +0.0610 (+0.04%)
     
  • Bitcoin USD

    71,132.95
    -140.35 (-0.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,956.77
    +24.79 (+0.31%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

ACM Research's (NASDAQ:ACMR) earnings growth rate lags the 44% CAGR delivered to shareholders

ACM Research, Inc. (NASDAQ:ACMR) shareholders might be concerned after seeing the share price drop 20% in the last month. But in three years the returns have been great. Indeed, the share price is up a very strong 200% in that time. After a run like that some may not be surprised to see prices moderate. The thing to consider is whether the underlying business is doing well enough to support the current price.

While the stock has fallen 9.3% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for ACM Research

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

ACM Research was able to grow its EPS at 28% per year over three years, sending the share price higher. This EPS growth is lower than the 44% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

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

earnings-per-share-growth
earnings-per-share-growth

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on ACM Research's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

The last twelve months weren't great for ACM Research shares, which performed worse than the market, costing holders 58%. The market shed around 22%, no doubt weighing on the stock price. Fortunately the longer term story is brighter, with total returns averaging about 44% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for ACM Research (1 is significant) that you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

Advertisement