Does HD Supply Holdings’s (NASDAQ:HDS) Share Price Gain of 78% Match Its Business Performance?

Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make significant gains if you buy good quality businesses at the right price. To wit, the HD Supply Holdings share price has climbed 78% in five years, easily topping the market return of 51% (ignoring dividends). On the other hand, the more recent gains haven’t been so impressive, with shareholders gaining just 16%.

View our latest analysis for HD Supply Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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).

During the five years of share price growth, HD Supply Holdings moved from a loss to profitability. That would generally be considered a positive, so we’d expect the share price to be up.

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

NasdaqGS:HDS Past and Future Earnings, April 6th 2019
NasdaqGS:HDS Past and Future Earnings, April 6th 2019

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. This free interactive report on HD Supply Holdings’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We’re pleased to report that HD Supply Holdings shareholders have received a total shareholder return of 16% over one year. That gain is better than the annual TSR over five years, which is 12%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.

HD Supply Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing 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 US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.