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Does Chuy's Holdings's (NASDAQ:CHUY) Share Price Gain of 44% Match Its Business Performance?

Simply Wall St

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. Furthermore, you'd generally like to see the share price rise faster than the market But Chuy's Holdings, Inc. (NASDAQ:CHUY) has fallen short of that second goal, with a share price rise of 44% over five years, which is below the market return. On a brighter note, more newer shareholders are probably rather content with the 35% share price gain over twelve months.

View our latest analysis for Chuy's Holdings

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...' 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 five years of share price growth, Chuy's Holdings actually saw its EPS drop 1.5% per year.

By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 11% per year is probably viewed as evidence that Chuy's Holdings is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

NasdaqGS:CHUY Income Statement, December 7th 2019

Take a more thorough look at Chuy's Holdings's financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Chuy's Holdings has rewarded shareholders with a total shareholder return of 35% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7.6% 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. If you would like to research Chuy's Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.

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. Thank you for reading.