LSB Industries (NYSE:LXU) swells 12% this week, taking three-year gains to 146%
It hasn't been the best quarter for LSB Industries, Inc. (NYSE:LXU) shareholders, since the share price has fallen 16% in that time. But that doesn't change the fact that the returns over the last three years have been very strong. In three years the stock price has launched 146% higher: a great result. To some, the recent share price pullback wouldn't be surprising after such a good run. The thing to consider is whether the underlying business is doing well enough to support the current price.
Since it's been a strong week for LSB Industries shareholders, let's have a look at trend of the longer term fundamentals.
See our latest analysis for LSB Industries
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.
LSB Industries became profitable within the last three years. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how LSB Industries has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling LSB Industries stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market gained around 33% in the last year, LSB Industries shareholders lost 19%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with LSB Industries (including 1 which is concerning) .
We will like LSB Industries better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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.
