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Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the YETI Holdings, Inc. (NYSE:YETI) share price has soared 117% return in just a single year. On top of that, the share price is up 47% in about a quarter. We'll need to follow YETI Holdings for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).
YETI Holdings was able to grow EPS by 35% in the last twelve months. This EPS growth is significantly lower than the 117% increase in the share price. This indicates that the market is now more optimistic about the stock. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 62.60.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that YETI Holdings has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at YETI Holdings' financial health with this free report on its balance sheet.
A Different Perspective
YETI Holdings shareholders should be happy with the total gain of 117% over the last twelve months. And the share price momentum remains respectable, with a gain of 47% in the last three months. This suggests the company is continuing to win over new investors. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with YETI Holdings , and understanding them should be part of your investment process.
We will like YETI Holdings 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.
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.
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