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Is America's Car-Mart's (NASDAQ:CRMT) Share Price Gain Of 159% Well Earned?

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the America's Car-Mart, Inc. (NASDAQ:CRMT) share price has flown 159% in the last three years. That sort of return is as solid as granite. It's also up 10% in about a month. But the price may well have benefitted from a buoyant market, since stocks have gained 4.8% in the last thirty days.

View our latest analysis for America's Car-Mart

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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, America's Car-Mart achieved compound earnings per share growth of 65% per year. The average annual share price increase of 37% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NasdaqGS:CRMT Past and Future Earnings, September 24th 2019

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of America's Car-Mart's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that America's Car-Mart shareholders have received a total shareholder return of 18% over one year. However, the TSR over five years, coming in at 18% per year, is even more impressive. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of America's Car-Mart by clicking this link.

America's Car-Mart is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

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.

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. Thank you for reading.