Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right stock, you can make a lot more than 100%. For example, the Adient plc (NYSE:ADNT) share price has soared 171% return in just a single year. But it's down 6.7% in the last week. However, the longer term returns haven't been so impressive, with the stock up just 2.1% in the last three years.
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. 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.
During the last year Adient grew its earnings per share (EPS) by 72%. Though we do note extraordinary items affected the bottom line. The share price gain of 171% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Adient has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Adient will grow revenue in the future.
A Different Perspective
Pleasingly, Adient's total shareholder return last year was 171%. So this year's TSR was actually better than the three-year TSR (annualized) of 1.2%. The improving returns to shareholders suggests the stock is becoming more popular with time. It's always interesting to track share price performance over the longer term. But to understand Adient better, we need to consider many other factors. Even so, be aware that Adient is showing 2 warning signs in our investment analysis , you should know about...
We will like Adient 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 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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