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Is Edwards Lifesciences' (NYSE:EW) 231% Share Price Increase Well Justified?

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Simply Wall St
·3 min read
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When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is Edwards Lifesciences Corporation (NYSE:EW) which saw its share price drive 231% higher over five years. It's also good to see the share price up 16% over the last quarter. But this could be related to the strong market, which is up 18% in the last three months.

See our latest analysis for Edwards Lifesciences

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.

Over half a decade, Edwards Lifesciences managed to grow its earnings per share at 12% a year. This EPS growth is lower than the 27% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 69.08.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

This free interactive report on Edwards Lifesciences' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Edwards Lifesciences shareholders gained a total return of 12% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 27% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Edwards Lifesciences better, we need to consider many other factors. For example, we've discovered 1 warning sign for Edwards Lifesciences that you should be aware of before investing here.

We will like Edwards Lifesciences 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.