Trex Company's (NYSE:TREX) five-year earnings growth trails the impressive shareholder returns
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Trex Company, Inc. (NYSE:TREX) which saw its share price drive 114% higher over five years. In more good news, the share price has risen 22% in thirty days. We note that Trex Company reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.
Since it's been a strong week for Trex Company shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Trex Company
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During five years of share price growth, Trex Company achieved compound earnings per share (EPS) growth of 9.9% per year. This EPS growth is slower than the share price growth of 16% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Trex Company's earnings, revenue and cash flow.
A Different Perspective
Trex Company shareholders have received returns of 6.1% over twelve months, which isn't far from the general market return. We should note here that the five-year TSR is more impressive, at 16% per year. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Trex Company a stock worth watching. 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 2 warning signs for Trex Company you should be aware of.
But note: Trex Company 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 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.
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