BlueLinx Holdings' (NYSE:BXC) 52% CAGR outpaced the company's earnings growth over the same three-year period
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. For instance the BlueLinx Holdings Inc. (NYSE:BXC) share price is 253% higher than it was three years ago. How nice for those who held the stock! It's even up 11% in the last week.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
See our latest analysis for BlueLinx Holdings
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 three years of share price growth, BlueLinx Holdings achieved compound earnings per share growth of 28% per year. In comparison, the 52% per year gain in the share price outpaces the EPS growth. So it's fair to assume the market has a higher opinion of the business than it did three years ago. That's not necessarily surprising considering the three-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
This free interactive report on BlueLinx Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that BlueLinx Holdings has rewarded shareholders with a total shareholder return of 21% in the last twelve months. Having said that, the five-year TSR of 27% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand BlueLinx Holdings better, we need to consider many other factors. For instance, we've identified 3 warning signs for BlueLinx Holdings (1 shouldn't be ignored) that you should be aware of.
But note: BlueLinx Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
