CSW Industrials, Inc. (NASDAQ:CSWI) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. To wit, the share price did better than an index fund, climbing 85% during that period.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years of share price growth, CSW Industrials achieved compound earnings per share growth of 42% per year. This EPS growth is higher than the 23% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how CSW Industrials has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at CSW Industrials's financial health with this free report on its balance sheet.
A Different Perspective
CSW Industrials shareholders are up 1.7% for the year (even including dividends) . While you don't go broke making a profit, this return was actually lower than the average market return of about 5.5%. But the (superior) three-year TSR of 23% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. If you would like to research CSW Industrials in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course CSW Industrials 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.
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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. Thank you for reading.