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Perseus's (ATH:PERS) Wonderful 402% Share Price Increase Shows How Capitalism Can Build Wealth

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Simply Wall St
·3 min read
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Investing can be hard but the potential fo an individual stock to pay off big time inspires us. Not every pick can be a winner, but when you pick the right stock, you can win big. For example, the Perseus SA (ATH:PERS) share price is up a whopping 402% in the last three years, a handsome return for long term holders. It's also good to see the share price up 12% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

Check out our latest analysis for Perseus

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. 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.

During three years of share price growth, Perseus achieved compound earnings per share growth of 75% per year. We note that the 71% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This suggests that sentiment and expectations have not changed drastically. Au contraire, the share price change has arguably mimicked the EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

ATSE:PERS Past and Future Earnings, March 16th 2020
ATSE:PERS Past and Future Earnings, March 16th 2020

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

It's nice to see that Perseus shareholders have received a total shareholder return of 15% over the last year. However, that falls short of the 15% TSR per annum it has made for shareholders, each year, over five years. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Perseus has 2 warning signs (and 1 which is concerning) we think you should know about.

Of course Perseus 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 GR exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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. Thank you for reading.