Addus HomeCare's (NASDAQ:ADUS) Wonderful 326% Share Price Increase Shows How Capitalism Can Build Wealth
For many, the main point of investing in the stock market is to achieve spectacular returns. And highest quality companies can see their share prices grow by huge amounts. Don't believe it? Then look at the Addus HomeCare Corporation (NASDAQ:ADUS) share price. It's 326% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. In the last week shares have slid back 4.9%.
Check out our latest analysis for Addus HomeCare
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, Addus HomeCare achieved compound earnings per share (EPS) growth of 8.2% per year. This EPS growth is lower than the 34% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 60.68.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Addus HomeCare has grown profits over the years, but the future is more important for shareholders. This free interactive report on Addus HomeCare's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that Addus HomeCare has rewarded shareholders with a total shareholder return of 39% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 34% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 1 warning sign for Addus HomeCare that you should be aware of.
Of course Addus HomeCare may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
