When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Daqo New Energy Corp. (NYSE:DQ) stock is up an impressive 181% over the last five years. It's also good to see the share price up 37% over the last quarter.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Over half a decade, Daqo New Energy managed to grow its earnings per share at 24% a year. This EPS growth is remarkably close to the 23% average annual increase in the share price. This indicates that investor sentiment towards the company has not changed a great deal. In fact, the share price seems to largely reflect the EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into Daqo New Energy's key metrics by checking this interactive graph of Daqo New Energy's earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Daqo New Energy shareholders have received a total shareholder return of 96% over one year. That's better than the annualised return of 23% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Daqo New Energy better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we've spotted with Daqo New Energy (including 1 which is is potentially serious) .
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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