Great Lakes Dredge & Dock (NASDAQ:GLDD) shareholders are still up 265% over 5 years despite pulling back 5.5% in the past week
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. One great example is Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) which saw its share price drive 265% higher over five years. On the other hand, the stock price has retraced 5.5% in the last week.
While the stock has fallen 5.5% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
View our latest analysis for Great Lakes Dredge & Dock
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During the last half decade, Great Lakes Dredge & Dock 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. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Great Lakes Dredge & Dock share price is up 37% in the last three years. During the same period, EPS grew by 8.2% each year. Notably, the EPS growth has been slower than the annualised share price gain of 11% over three years. So one can reasonably conclude the market is more enthusiastic about the stock than it was three years ago.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Great Lakes Dredge & Dock has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
While it's certainly disappointing to see that Great Lakes Dredge & Dock shares lost 1.4% throughout the year, that wasn't as bad as the market loss of 20%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 30% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Great Lakes Dredge & Dock you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
