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Elanco Animal Health (NYSE:ELAN) Shareholders Booked A 57% Gain In The Last Year

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  • ELAN

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Elanco Animal Health Incorporated (NYSE:ELAN) share price is up 57% in the last year, clearly besting the market return of around 39% (not including dividends). So that should have shareholders smiling. We'll need to follow Elanco Animal Health for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

Check out our latest analysis for Elanco Animal Health

Elanco Animal Health wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over the last twelve months, Elanco Animal Health's revenue grew by 29%. That's a fairly respectable growth rate. While the share price performed well, gaining 57% over twelve months, you could argue the revenue growth warranted it. If revenue stays on trend, there may be plenty more share price gains to come. But it's crucial to check profitability and cash flow before forming a view on the future.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Elanco Animal Health stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Elanco Animal Health shareholders should be happy with the total gain of 57% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 18% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Elanco Animal Health is showing 1 warning sign in our investment analysis , you should know about...

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.

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.