U.S. markets close in 2 hours 28 minutes
  • S&P 500

    4,427.82
    +71.37 (+1.64%)
     
  • Dow 30

    34,637.54
    +339.81 (+0.99%)
     
  • Nasdaq

    13,891.40
    +352.11 (+2.60%)
     
  • Russell 2000

    2,040.25
    +36.22 (+1.81%)
     
  • Crude Oil

    87.51
    +1.91 (+2.23%)
     
  • Gold

    1,829.70
    -22.80 (-1.23%)
     
  • Silver

    23.77
    -0.12 (-0.51%)
     
  • EUR/USD

    1.1296
    -0.0010 (-0.0904%)
     
  • 10-Yr Bond

    1.7850
    +0.0020 (+0.11%)
     
  • Vix

    27.69
    -3.47 (-11.14%)
     
  • GBP/USD

    1.3520
    +0.0014 (+0.1014%)
     
  • USD/JPY

    114.2900
    +0.4240 (+0.3724%)
     
  • BTC-USD

    37,775.35
    +559.61 (+1.50%)
     
  • CMC Crypto 200

    865.04
    +9.23 (+1.08%)
     
  • FTSE 100

    7,469.78
    +98.32 (+1.33%)
     
  • Nikkei 225

    27,011.33
    -120.01 (-0.44%)
     

ANSYS (NASDAQ:ANSS) shareholders have earned a 33% CAGR over the last five years

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • ANSS

We think all investors should try to buy and hold high quality multi-year winners. While not every stock performs well, when investors win, they can win big. For example, the ANSYS, Inc. (NASDAQ:ANSS) share price is up a whopping 323% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. And in the last month, the share price has gained 14%. But the price may well have benefitted from a buoyant market, since stocks have gained 6.3% in the last thirty days.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for ANSYS

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 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.

Over half a decade, ANSYS managed to grow its earnings per share at 12% a year. This EPS growth is slower than the share price growth of 33% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. 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 73.35.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

We know that ANSYS has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

ANSYS provided a TSR of 19% over the last twelve months. But that was short of the market average. On the bright side, the longer term returns (running at about 33% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with ANSYS , and understanding them should be part of your investment process.

We will like ANSYS better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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.

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.

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