If You Had Bought Eneva (BVMF:ENEV3) Stock Five Years Ago, You Could Pocket A 519% Gain Today

Buying shares in the best businesses can build meaningful wealth for you and your family. And we've seen some truly amazing gains over the years. To wit, the Eneva S.A. (BVMF:ENEV3) share price has soared 519% over five years. If that doesn't get you thinking about long term investing, we don't know what will. Also pleasing for shareholders was the 30% gain in the last three months. But this could be related to the strong market, which is up 13% in the last three months.

It really delights us to see such great share price performance for investors.

View our latest analysis for Eneva

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

During the five years of share price growth, Eneva moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Eneva share price is up 432% in the last three years. Meanwhile, EPS is up 74% per year. That makes EPS very close to the 75% share price growth, each year, over the same period. So you could reasonably conclude that investor sentiment towards the stock has remained pretty steady, over time. There's a strong correlation between the share price and EPS.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Eneva has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's nice to see that Eneva shareholders have received a total shareholder return of 72% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 44% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Eneva better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Eneva (of which 1 is potentially serious!) you should know about.

We will like Eneva better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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