Sterling Infrastructure (NASDAQ:STRL) jumps 6.9% this week, though earnings growth is still tracking behind three-year shareholder returns
By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the Sterling Infrastructure, Inc. (NASDAQ:STRL) share price is up 56% in the last three years, clearly besting the market return of around 24% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 11% in the last year.
Since the stock has added US$51m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Sterling Infrastructure
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).
Sterling Infrastructure was able to grow its EPS at 41% per year over three years, sending the share price higher. The average annual share price increase of 16% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.33.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Sterling Infrastructure has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Sterling Infrastructure's financial health with this free report on its balance sheet.
A Different Perspective
We're pleased to report that Sterling Infrastructure shareholders have received a total shareholder return of 11% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8% per year), it would seem that the stock's performance has improved in recent times. 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 Sterling Infrastructure better, we need to consider many other factors. Take risks, for example - Sterling Infrastructure has 2 warning signs we think you should be aware of.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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.
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