What Type Of Returns Would Beacon Roofing Supply's(NASDAQ:BECN) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

While it may not be enough for some shareholders, we think it is good to see the Beacon Roofing Supply, Inc. (NASDAQ:BECN) share price up 21% in a single quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 33% in the last three years, falling well short of the market return.

See our latest analysis for Beacon Roofing Supply

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 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.

We know that Beacon Roofing Supply has been profitable in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics may better explain the share price move.

Revenue is actually up 14% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Beacon Roofing Supply further; while we may be missing something on this analysis, there might also be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Beacon Roofing Supply in this interactive graph of future profit estimates.

A Different Perspective

Beacon Roofing Supply shareholders are up 20% for the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 1.0% per year over five year. It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand Beacon Roofing Supply better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Beacon Roofing Supply .

Beacon Roofing Supply is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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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