The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. To wit, the e.l.f. Beauty, Inc. (NYSE:ELF) share price has flown 247% in the last three years. How nice for those who held the stock! Also pleasing for shareholders was the 41% gain in the last three months.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
Check out our latest analysis for e.l.f. Beauty
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).
e.l.f. Beauty was able to grow its EPS at 150% per year over three years, sending the share price higher. This EPS growth is higher than the 51% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. Of course, with a P/E ratio of 83.92, the market remains optimistic.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how e.l.f. Beauty has grown profits over the years, but the future is more important for shareholders. This free interactive report on e.l.f. Beauty's balance sheet strength is a great place to start, if you want to investigate the stock further.
It's good to see that e.l.f. Beauty has rewarded shareholders with a total shareholder return of 79% in the last twelve months. That's better than the annualised return of 19% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand e.l.f. Beauty better, we need to consider many other factors. For example, we've discovered 1 warning sign for e.l.f. Beauty that you should be aware of before investing here.
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.
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.
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