If you buy and hold a stock for many years, you’d hope to be making a profit. Better yet, you’d like to see the share price move up more than the market average. Unfortunately for shareholders, while the Hub Group, Inc. (NASDAQ:HUBG) share price is up 36% in the last five years, that’s less than the market return. Zooming in, the stock is up a respectable 14% in the last year.
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 five years of share price growth, Hub Group achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is higher than the 6.4% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
Hub Group provided a TSR of 14% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that’s still a gain, and it’s actually better than the average return of 6.4% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It’s always interesting to track share price performance over the longer term. But to understand Hub Group better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with Hub Group .
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.
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