Introducing Ergomed (LON:ERGO), The Stock That Soared 888% In The Last Five Years
We think all investors should try to buy and hold high quality multi-year winners. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held Ergomed plc (LON:ERGO) shares for the last five years, while they gained 888%. This just goes to show the value creation that some businesses can achieve. Unfortunately, though, the stock has dropped 5.4% over a week. But note that the broader market is down 0.7% since last week, and this may have impacted Ergomed's share price.
Anyone who held for that rewarding ride would probably be keen to talk about it.
View our latest analysis for Ergomed
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).
During the five years of share price growth, Ergomed 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.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Ergomed has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Ergomed's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Ergomed shareholders have received a total shareholder return of 183% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 58% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before forming an opinion on Ergomed you might want to consider these 3 valuation metrics.
But note: Ergomed may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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.
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