ACM Research's (NASDAQ:ACMR) three-year earnings growth trails the fantastic shareholder returns
We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. But when you hold the right stock for the right time period, the rewards can be truly huge. One such superstar is ACM Research, Inc. (NASDAQ:ACMR), which saw its share price soar 947% in three years. It's also good to see the share price up 17% over the last quarter. It really delights us to see such great share price performance for investors.
The past week has proven to be lucrative for ACM Research investors, so let's see if fundamentals drove the company's three-year performance.
View our latest analysis for ACM Research
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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, ACM Research achieved compound earnings per share growth of 86% per year. This EPS growth is lower than the 119% average annual increase in the share price. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It's not unusual to see the market 're-rate' a stock, after a few years of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 71.61.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that ACM Research 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
Over the last year ACM Research shareholders have received a TSR of 18%. Unfortunately this falls short of the market return of around 36%. But the (superior) three-year TSR of 119% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. It's always interesting to track share price performance over the longer term. But to understand ACM Research better, we need to consider many other factors. For example, we've discovered 2 warning signs for ACM Research (1 is a bit unpleasant!) that you should be aware of before investing here.
But note: ACM Research may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
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