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Is Horizon Therapeutics's (NASDAQ:HZNP) 128% Share Price Increase Well Justified?

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) shareholders would be well aware of this, since the stock is up 128% in five years. It's also good to see the share price up 19% over the last quarter.

View our latest analysis for Horizon Therapeutics

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 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, Horizon Therapeutics became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

NasdaqGS:HZNP Past and Future Earnings, October 17th 2019

We know that Horizon Therapeutics has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Horizon Therapeutics will grow revenue in the future.

A Different Perspective

It's good to see that Horizon Therapeutics has rewarded shareholders with a total shareholder return of 50% in the last twelve months. That gain is better than the annual TSR over five years, which is 18%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Is Horizon Therapeutics cheap compared to other companies? These 3 valuation measures might help you decide.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.

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 editorial-team@simplywallst.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. Thank you for reading.