WellCare Health Plans, Inc. (NYSE:WCG) shareholders have seen the share price descend 12% over the month. But that doesn’t change the fact that the returns over the last five years have been very strong. It’s fair to say most would be happy with 292% the gain in that time. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Ultimately business performance will determine whether the stock price continues the positive long term trend.
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.
Over half a decade, WellCare Health Plans managed to grow its earnings per share at 18% a year. This EPS growth is lower than the 31% average annual increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. And that’s hardly shocking given the track record of growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
We’re pleased to report that WellCare Health Plans shareholders have received a total shareholder return of 28% over one year. However, the TSR over five years, coming in at 31% per year, is even more impressive. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of WellCare Health Plans by clicking this link.
WellCare Health Plans is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.