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Can You Imagine How Chuffed Axcelis Technologies's (NASDAQ:ACLS) Shareholders Feel About Its 138% Share Price Gain?

Simply Wall St

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. Long term Axcelis Technologies, Inc. (NASDAQ:ACLS) shareholders would be well aware of this, since the stock is up 138% in five years. It's also good to see the share price up 17% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 7.2% in 90 days).

View our latest analysis for Axcelis Technologies

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.

During the five years of share price growth, Axcelis Technologies moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Axcelis Technologies share price is up 50% in the last three years. During the same period, EPS grew by 21% each year. This EPS growth is higher than the 14% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. Having said that, the market is still optimistic, given the P/E ratio of 50.53.

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

NasdaqGS:ACLS Past and Future Earnings, January 31st 2020

This free interactive report on Axcelis Technologies's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Axcelis Technologies shareholders are up 18% for the year. But that return falls short of the market. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 19% over five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Axcelis Technologies better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Axcelis Technologies .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.

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.

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. Thank you for reading.