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Did Business Growth Power Medpace Holdings' (NASDAQ:MEDP) Share Price Gain of 261%?

Simply Wall St
·2 min 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 if you buy shares in a really great company, you can more than double your money. For instance the Medpace Holdings, Inc. (NASDAQ:MEDP) share price is 261% higher than it was three years ago. How nice for those who held the stock! We note the stock price is up 2.8% in the last seven days.

Check out our latest analysis for Medpace Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Medpace Holdings achieved compound earnings per share growth of 71% per year. This EPS growth is higher than the 53% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

It is of course excellent to see how Medpace Holdings has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're pleased to report that Medpace Holdings rewarded shareholders with a total shareholder return of 63% over the last year. That's better than the annualized TSR of 53% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. Before spending more time on Medpace Holdings it might be wise to click here to see if insiders have been buying or selling shares.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.