Advertisement
U.S. markets close in 1 hour 7 minutes
  • S&P 500

    5,253.10
    +4.61 (+0.09%)
     
  • Dow 30

    39,781.91
    +21.83 (+0.05%)
     
  • Nasdaq

    16,381.48
    -18.04 (-0.11%)
     
  • Russell 2000

    2,122.65
    +8.30 (+0.39%)
     
  • Crude Oil

    83.12
    +1.77 (+2.18%)
     
  • Gold

    2,239.20
    +26.50 (+1.20%)
     
  • Silver

    24.92
    +0.17 (+0.68%)
     
  • EUR/USD

    1.0790
    -0.0040 (-0.37%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2617
    -0.0021 (-0.16%)
     
  • USD/JPY

    151.3830
    +0.1370 (+0.09%)
     
  • Bitcoin USD

    70,472.61
    +1,754.51 (+2.55%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Those who invested in LKQ (NASDAQ:LKQ) three years ago are up 122%

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the LKQ Corporation (NASDAQ:LKQ) share price has flown 121% in the last three years. Most would be happy with that. Also pleasing for shareholders was the 11% gain in the last three months.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for LKQ

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

LKQ was able to grow its EPS at 25% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 30% average annual increase in the share price. This suggests that sentiment and expectations have not changed drastically. Rather, the share price has approximately tracked EPS growth.

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

We know that LKQ has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

It's nice to see that LKQ shareholders have received a total shareholder return of 52% over the last year. Of course, that includes the dividend. That's better than the annualised return of 13% 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. 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. Case in point: We've spotted 1 warning sign for LKQ you should be aware of.

But note: LKQ may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.

Advertisement