Enterprise Group (TSE:E) surges 12% this week, taking five-year gains to 745%

For many, the main point of investing in the stock market is to achieve spectacular returns. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held Enterprise Group, Inc. (TSE:E) shares for the last five years, while they gained 745%. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 33% in about a quarter. It really delights us to see such great share price performance for investors.

The past week has proven to be lucrative for Enterprise Group investors, so let's see if fundamentals drove the company's five-year performance.

See our latest analysis for Enterprise Group

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years of share price growth, Enterprise Group moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It is of course excellent to see how Enterprise Group has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Enterprise Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Enterprise Group shareholders have received a total shareholder return of 213% over one year. That gain is better than the annual TSR over five years, which is 53%. Therefore it seems like sentiment around the company has been positive lately. 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 Enterprise Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Enterprise Group , and understanding them should be part of your investment process.

Of course Enterprise Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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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.