SPS Commerce (NASDAQ:SPSC) jumps 3.6% this week, though earnings growth is still tracking behind five-year shareholder returns
Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the SPS Commerce, Inc. (NASDAQ:SPSC) share price. It's 358% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. Better yet, the share price has risen 3.6% in the last week. But this could be related to the buoyant market which is up about 3.0% in a week.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
See our latest analysis for SPS Commerce
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.
Over half a decade, SPS Commerce managed to grow its earnings per share at 53% a year. The EPS growth is more impressive than the yearly share price gain of 36% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. Having said that, the market is still optimistic, given the P/E ratio of 107.87.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into SPS Commerce's key metrics by checking this interactive graph of SPS Commerce's earnings, revenue and cash flow.
A Different Perspective
It's nice to see that SPS Commerce shareholders have received a total shareholder return of 35% over the last year. However, that falls short of the 36% TSR per annum it has made for shareholders, each year, over five years. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
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.
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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.
