The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. For example, the Travelzoo (NASDAQ:TZOO) share price is up 97% in the last year, clearly besting than the market return of around 0.6% (not including dividends). So that should have shareholders smiling. And shareholders have also done well over the long term, with an increase of 55% in the last three years.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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 year Travelzoo grew its earnings per share (EPS) by 206%. This EPS growth is significantly higher than the 97% increase in the share price. So it seems like the market has cooled on Travelzoo, despite the growth. Interesting.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Travelzoo has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
It’s nice to see that Travelzoo shareholders have received a total shareholder return of 97% over the last year. Notably the five-year annualised TSR loss of 11% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. If you would like to research Travelzoo 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 Travelzoo 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.
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 email@example.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.