These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) share price is 49% higher than it was a year ago, much better than the market return of around 41% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 34% in the last three years.
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...' 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.
American Axle & Manufacturing Holdings was able to grow EPS by 98% in the last twelve months. We note, however, that extraordinary items have impacted earnings. It's fair to say that the share price gain of 49% did not keep pace with the EPS growth. So it seems like the market has cooled on American Axle & Manufacturing Holdings, despite the growth. Interesting.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that American Axle & Manufacturing Holdings has improved its bottom line lately, but is it going to grow revenue? Check if analysts think American Axle & Manufacturing Holdings will grow revenue in the future.
A Different Perspective
It's nice to see that American Axle & Manufacturing Holdings shareholders have received a total shareholder return of 49% over the last year. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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