Endava's (NYSE:DAVA) 21% CAGR outpaced the company's earnings growth over the same three-year period
It hasn't been the best quarter for Endava plc (NYSE:DAVA) shareholders, since the share price has fallen 18% in that time. But that doesn't change the fact that the returns over the last three years have been pleasing. After all, the share price is up a market-beating 75% in that time.
Since it's been a strong week for Endava shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Endava
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During three years of share price growth, Endava achieved compound earnings per share growth of 33% per year. This EPS growth is higher than the 21% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Endava has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Endava's financial health with this free report on its balance sheet.
A Different Perspective
The last twelve months weren't great for Endava shares, which performed worse than the market, costing holders 45%. Meanwhile, the broader market slid about 15%, likely weighing on the stock. Investors are up over three years, booking 21% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand Endava better, we need to consider many other factors. For example, we've discovered 1 warning sign for Endava that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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