Did You Miss Power Integrations' (NASDAQ:POWI) Impressive 288% Share Price Gain?
When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. For example, the Power Integrations, Inc. (NASDAQ:POWI) share price has soared 288% in the last half decade. Most would be very happy with that. On top of that, the share price is up 33% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.
See our latest analysis for Power Integrations
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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, Power Integrations achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is lower than the 31% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. 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 77.77.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Power Integrations has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Power Integrations' financial health with this free report on its balance sheet.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Power Integrations' TSR for the last 5 years was 304%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
We're pleased to report that Power Integrations shareholders have received a total shareholder return of 104% over one year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 32% per year), it would seem that the stock's performance has improved in recent times. 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 Power Integrations better, we need to consider many other factors. Take risks, for example - Power Integrations has 3 warning signs we think you should be aware of.
We will like Power Integrations 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. 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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