U.S. Markets closed
  • S&P 500

    4,026.12
    -1.14 (-0.03%)
     
  • Dow 30

    34,347.03
    +152.93 (+0.45%)
     
  • Nasdaq

    11,226.36
    -58.94 (-0.52%)
     
  • Russell 2000

    1,869.19
    +5.67 (+0.30%)
     
  • Crude Oil

    76.55
    -1.39 (-1.78%)
     
  • Gold

    1,755.00
    +9.40 (+0.54%)
     
  • Silver

    21.48
    +0.11 (+0.53%)
     
  • EUR/USD

    1.0392
    -0.0021 (-0.1974%)
     
  • 10-Yr Bond

    3.6910
    -0.0150 (-0.40%)
     
  • Vix

    20.50
    +0.08 (+0.39%)
     
  • GBP/USD

    1.2070
    -0.0044 (-0.3621%)
     
  • USD/JPY

    139.1680
    +0.5780 (+0.4171%)
     
  • BTC-USD

    16,556.96
    +61.23 (+0.37%)
     
  • CMC Crypto 200

    386.97
    +4.32 (+1.13%)
     
  • FTSE 100

    7,486.67
    +20.07 (+0.27%)
     
  • Nikkei 225

    28,283.03
    -100.07 (-0.35%)
     

Plexus' (NASDAQ:PLXS) five-year total shareholder returns outpace the underlying earnings growth

Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make significant gains if you buy good quality businesses at the right price. To wit, the Plexus share price has climbed 53% in five years, easily topping the market return of 38% (ignoring dividends).

In light of the stock dropping 4.7% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

See our latest analysis for Plexus

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 five years of share price growth, Plexus achieved compound earnings per share (EPS) growth of 7.5% per year. This EPS growth is reasonably close to the 9% average annual increase in the share price. 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 graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

Dive deeper into Plexus' key metrics by checking this interactive graph of Plexus's earnings, revenue and cash flow.

A Different Perspective

While it's certainly disappointing to see that Plexus shares lost 5.7% throughout the year, that wasn't as bad as the market loss of 23%. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Plexus (of which 1 can't be ignored!) you should know about.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here