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Long term investing can be life changing when you buy and hold the truly great businesses. While the best companies are hard to find, but they can generate massive returns over long periods. For example, the Hamilton Thorne Ltd. (CVE:HTL) share price is up a whopping 2211% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve.
We love happy stories like this one. The company should be really proud of that performance!
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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 the last half decade, Hamilton Thorne became profitable. 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. 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. Indeed, the Hamilton Thorne share price has gained 478% in three years. During the same period, EPS grew by 40% each year. Notably, the EPS growth has been slower than the annualised share price gain of 79% over three years. So it’s fair to assume the market has a higher opinion of the business than it did three years ago.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Hamilton Thorne has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Hamilton Thorne stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It’s nice to see that Hamilton Thorne shareholders have received a total shareholder return of 32% over the last year. Having said that, the five-year TSR of 87% a year, is even better. Potential buyers might understandably feel they’ve missed the opportunity, but it’s always possible business is still firing on all cylinders. If you would like to research Hamilton Thorne in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Hamilton Thorne 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 CA exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.