SMART Global Holdings (NASDAQ:SGH) climbs 5.0% this week, taking three-year gains to 88%
By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the SMART Global Holdings, Inc. (NASDAQ:SGH) share price is up 88% in the last three years, clearly besting the market return of around 33% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 36%.
Since the stock has added US$63m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
View our latest analysis for SMART Global Holdings
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 three years of share price growth, SMART Global Holdings moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how SMART Global Holdings has grown profits over the years, but the future is more important for shareholders. This free interactive report on SMART Global Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that SMART Global Holdings shareholders have received a total shareholder return of 36% over the last year. That's better than the annualised return of 10% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand SMART Global Holdings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with SMART Global Holdings (including 1 which is concerning) .
We will like SMART Global Holdings 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.
