One simple way to benefit from the stock market is to buy an index fund. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the Beacon Roofing Supply, Inc. (NASDAQ:BECN) share price is up 62% in the last three years, clearly besting the market return of around 33% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 10%.
The past week has proven to be lucrative for Beacon Roofing Supply investors, so let's see if fundamentals drove the company's three-year performance.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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, Beacon Roofing Supply moved from a loss to profitability. So we would expect a higher share price over the period.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Beacon Roofing Supply has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Beacon Roofing Supply stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that Beacon Roofing Supply shareholders have received a total shareholder return of 10% over one year. That's better than the annualised return of 3% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Beacon Roofing Supply better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Beacon Roofing Supply you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.
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