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If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the Academy Sports and Outdoors, Inc. (NASDAQ:ASO) share price is up 11% in the last 1 year, clearly besting the market decline of around 17% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow Academy Sports and Outdoors for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Since it's been a strong week for Academy Sports and Outdoors shareholders, let's have a look at trend of the longer term fundamentals.
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Academy Sports and Outdoors was able to grow EPS by 20% in the last twelve months. It's fair to say that the share price gain of 11% did not keep pace with the EPS growth. So it seems like the market has cooled on Academy Sports and Outdoors, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.26.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Academy Sports and Outdoors' earnings, revenue and cash flow.
A Different Perspective
Academy Sports and Outdoors boasts a total shareholder return of 12% for the last year (that includes the dividends) . We regret to report that the share price is down 1.2% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Academy Sports and Outdoors is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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