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For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the Exelixis, Inc. (NASDAQ:EXEL) share price. It's 474% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. Meanwhile the share price is 3.7% higher than it was a week ago.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last half decade, Exelixis became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Exelixis has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Exelixis's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Exelixis shareholders gained a total return of 1.8% during the year. But that was short of the market average. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 42% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. If you would like to research Exelixis in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Exelixis 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.
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 firstname.lastname@example.org. 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.