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Is Turning Point Brands' (NYSE:TPB) 136% Share Price Increase Well Justified?

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Simply Wall St
·3 min read
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Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Turning Point Brands, Inc. (NYSE:TPB). Its share price is already up an impressive 136% in the last twelve months. It's also good to see the share price up 12% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 8.6% in 90 days). And shareholders have also done well over the long term, with an increase of 134% in the last three years.

Check out our latest analysis for Turning Point Brands

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 the last year Turning Point Brands grew its earnings per share (EPS) by 143%. We note that the earnings per share growth isn't far from the share price growth (of 136%). That suggests that the market sentiment around the company hasn't changed much over that time. It makes intuitive sense that the share price and EPS would grow at similar rates.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
earnings-per-share-growth

We know that Turning Point Brands has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

We're pleased to report that Turning Point Brands rewarded shareholders with a total shareholder return of 137% over the last year. And yes, that does include the dividend. That's better than the annualized TSR of 34% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting Turning Point Brands on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Turning Point Brands better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Turning Point Brands (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.