Blue Bird's (NASDAQ:BLBD) earnings growth rate lags the 14% CAGR delivered to shareholders

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. To wit, the Blue Bird share price has climbed 93% in five years, easily topping the market return of 74% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 57%.

Since the long term performance has been good but there's been a recent pullback of 5.9%, let's check if the fundamentals match the share price.

See our latest analysis for Blue Bird

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.

During the five years of share price growth, Blue Bird moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.

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

We know that Blue Bird has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Blue Bird's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Blue Bird has rewarded shareholders with a total shareholder return of 57% in the last twelve months. That's better than the annualised return of 14% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Blue Bird better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Blue Bird .

Of course Blue Bird 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 American 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.