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The Alphabet (NASDAQ:GOOG.L) Share Price Has Gained 117%, So Why Not Pay It Some Attention?

Simply Wall St
·2 mins read

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Alphabet Inc. (NASDAQ:GOOG.L) which saw its share price drive 117% higher over five years. Meanwhile the share price is 3.8% higher than it was a week ago.

Check out our latest analysis for Alphabet

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).

Over half a decade, Alphabet managed to grow its earnings per share at 17% a year. That makes the EPS growth particularly close to the yearly share price growth of 17%. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. In fact, the share price seems to largely reflect the EPS growth.

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

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

It might be well worthwhile taking a look at our free report on Alphabet's earnings, revenue and cash flow.

A Different Perspective

Alphabet's TSR for the year was broadly in line with the market average, at 24%. That gain looks pretty satisfying, and it is even better than the five-year TSR of 17% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. Is Alphabet cheap compared to other companies? These 3 valuation measures might help you decide.

Of course Alphabet 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.

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. 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.

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