Intuitive Surgical's (NASDAQ:ISRG) 14% CAGR outpaced the company's earnings growth over the same five-year period
When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Intuitive Surgical, Inc. (NASDAQ:ISRG) shareholders have enjoyed a 89% share price rise over the last half decade, well in excess of the market return of around 47% (not including dividends).
Since the stock has added US$4.2b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Intuitive Surgical
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
Over half a decade, Intuitive Surgical managed to grow its earnings per share at 14% a year. That makes the EPS growth particularly close to the yearly share price growth of 14%. That suggests that the market sentiment around the company hasn't changed much over that time. Indeed, it would appear the share price is reacting to the EPS.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
This free interactive report on Intuitive Surgical's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Intuitive Surgical shareholders are down 14% over twelve months, which isn't far from the market return of -14%. The silver lining is that longer term investors would have made a total return of 14% per year over half a decade. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. Before forming an opinion on Intuitive Surgical you might want to consider these 3 valuation metrics.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
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