BlueLinx Holdings (NYSE:BXC) pulls back 8.0% this week, but still delivers shareholders impressive 29% CAGR over 5 years

When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of BlueLinx Holdings Inc. (NYSE:BXC) stock is up an impressive 259% over the last five years. Unfortunately, though, the stock has dropped 8.0% over a week.

Since the long term performance has been good but there's been a recent pullback of 8.0%, let's check if the fundamentals match the share price.

View our latest analysis for BlueLinx Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 half decade, BlueLinx Holdings became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

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

Dive deeper into BlueLinx Holdings' key metrics by checking this interactive graph of BlueLinx Holdings's earnings, revenue and cash flow.

A Different Perspective

BlueLinx Holdings shareholders gained a total return of 15% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 29% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with BlueLinx Holdings , and understanding them should be part of your investment process.

But note: BlueLinx Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.