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Alaska Communications Systems Group (NASDAQ:ALSK) Shareholders Have Enjoyed A 20% Share Price Gain

Simply Wall St

If you buy and hold a stock for many years, you'd hope to be making a profit. Furthermore, you'd generally like to see the share price rise faster than the market Unfortunately for shareholders, while the Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) share price is up 20% in the last five years, that's less than the market return. Looking at the last year alone, the stock is up 8.7%.

View our latest analysis for Alaska Communications Systems Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last half decade, Alaska Communications Systems Group became profitable. That would generally be considered a positive, so we'd expect the share price to be up. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Alaska Communications Systems Group share price is up 18% in the last three years. In the same period, EPS is up 52% per year. This EPS growth is higher than the 5.8% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

NasdaqGS:ALSK Past and Future Earnings, February 25th 2020

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Alaska Communications Systems Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Alaska Communications Systems Group shareholders gained a total return of 8.7% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 3.8% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Alaska Communications Systems Group better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Alaska Communications Systems Group you should be aware of, and 1 of them is a bit unpleasant.

Alaska Communications Systems Group is not the only stock that insiders are buying. 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.

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.