HCA Healthcare (NYSE:HCA) Shareholders Have Enjoyed An Impressive 146% Share Price Gain
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of HCA Healthcare, Inc. (NYSE:HCA) stock is up an impressive 146% over the last five years. On top of that, the share price is up 30% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 13% in 90 days).
See our latest analysis for HCA Healthcare
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Over half a decade, HCA Healthcare managed to grow its earnings per share at 15% a year. This EPS growth is lower than the 20% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between HCA Healthcare's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. HCA Healthcare's TSR of 153% for the 5 years exceeded its share price return, because it has paid dividends.
A Different Perspective
HCA Healthcare shareholders are up 10% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 20% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand HCA Healthcare better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for HCA Healthcare you should know about.
Of course HCA Healthcare may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
