Earnings grew faster than the respectable 34% return delivered to Great Lakes Dredge & Dock (NASDAQ:GLDD) shareholders over the last year

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) share price is up 34% in the last 1 year, clearly besting the market return of around 12% (not including dividends). That's a solid performance by our standards! Zooming out, the stock is actually down 5.1% in the last three years.

In light of the stock dropping 6.9% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

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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.

During the last year Great Lakes Dredge & Dock grew its earnings per share (EPS) by 81%. It's fair to say that the share price gain of 34% did not keep pace with the EPS growth. So it seems like the market has cooled on Great Lakes Dredge & Dock, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.85.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Great Lakes Dredge & Dock has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

We're pleased to report that Great Lakes Dredge & Dock shareholders have received a total shareholder return of 34% over one year. That gain is better than the annual TSR over five years, which is 5%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Great Lakes Dredge & Dock better, we need to consider many other factors. Take risks, for example - Great Lakes Dredge & Dock has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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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.