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Does Century Casinos's (NASDAQ:CNTY) Share Price Gain of 49% Match Its Business Performance?

Simply Wall St

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Vanguard founder Jack Bogle helped spearhead the low-cost index fund, putting average returns within reach of every investor. But if you pick the right individual stocks, you could make more than that. To wit, Century Casinos, Inc. (NASDAQ:CNTY) shares are up 49% in three years, besting the market return. More recently the stock has gained 17% in a year, which isn't too bad.

View our latest analysis for Century Casinos

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the three years of share price growth, Century Casinos actually saw its earnings per share (EPS) drop 37% per year. Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Therefore, we think it's worth considering other metrics as well.

It may well be that Century Casinos revenue growth rate of 8.9% over three years has convinced shareholders to believe in a brighter future. If the company is being managed for the long term good, today's shareholders might be right to hold on.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

NasdaqCM:CNTY Income Statement, April 9th 2019

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Century Casinos stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

We're pleased to report that Century Casinos shareholders have received a total shareholder return of 17% over one year. That's better than the annualised return of 7.0% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Century Casinos by clicking this link.

Century Casinos is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.