ReadyTech Holdings (ASX:RDY) Shareholders Have Enjoyed A 36% Share Price Gain

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. For example, the ReadyTech Holdings Limited (ASX:RDY) share price is up 36% in the last year, clearly besting the market return of around 29% (not including dividends). So that should have shareholders smiling. ReadyTech Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for ReadyTech Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

ReadyTech Holdings was able to grow EPS by 173% in the last twelve months. This EPS growth is significantly higher than the 36% increase in the share price. Therefore, it seems the market isn't as excited about ReadyTech Holdings as it was before. This could be an opportunity.

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. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on ReadyTech Holdings' earnings, revenue and cash flow.

A Different Perspective

ReadyTech Holdings shareholders have gained 36% over twelve months, which isn't far from the market return of 33%. Unfortunately the share price is down 15% over the last quarter. It may simply be that the share price got ahead of itself, although you might want to check for any weak results. 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 ReadyTech Holdings you should be aware of.

ReadyTech Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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