IDEXX Laboratories' (NASDAQ:IDXX) investors will be pleased with their strong 166% return over the last five years
When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For example, the IDEXX Laboratories, Inc. (NASDAQ:IDXX) share price has soared 166% in the last half decade. Most would be very happy with that. It's also good to see the share price up 13% over the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for IDEXX Laboratories
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 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).
Over half a decade, IDEXX Laboratories managed to grow its earnings per share at 22% a year. That makes the EPS growth particularly close to the yearly share price growth of 22%. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on IDEXX Laboratories' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Although it hurts that IDEXX Laboratories returned a loss of 5.7% in the last twelve months, the broader market was actually worse, returning a loss of 8.4%. Longer term investors wouldn't be so upset, since they would have made 22%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for IDEXX Laboratories you should know about.
We will like IDEXX Laboratories 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
