DXP Enterprises' (NASDAQ:DXPE) 57% CAGR outpaced the company's earnings growth over the same three-year period

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For example, the DXP Enterprises, Inc. (NASDAQ:DXPE) share price has soared 285% in the last three years. That sort of return is as solid as granite. It's also good to see the share price up 46% over the last quarter.

Since the stock has added US$67m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for DXP Enterprises

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

DXP Enterprises was able to grow its EPS at 84% per year over three years, sending the share price higher. This EPS growth is higher than the 57% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how DXP Enterprises has grown profits over the years, but the future is more important for shareholders. This free interactive report on DXP Enterprises' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that DXP Enterprises shareholders have received a total shareholder return of 193% over one year. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for DXP Enterprises you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.