The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. Long term Roper Technologies, Inc. (NYSE:ROP) shareholders would be well aware of this, since the stock is up 159% in five years. In the last week the share price is up 4.5%.
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 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.
Over half a decade, Roper Technologies managed to grow its earnings per share at 17% a year. So the EPS growth rate is rather close to the annualized share price gain of 21% per year. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth.
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 Roper Technologies has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Roper Technologies will grow revenue in the future.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Roper Technologies the TSR over the last 5 years was 167%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Roper Technologies provided a TSR of 18% over the last twelve months. But that was short of the market average. On the bright side, the longer term returns (running at about 22% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Roper Technologies better, we need to consider many other factors. For instance, we've identified 2 warning signs for Roper Technologies (1 is potentially serious) that you should be aware of.
Of course Roper Technologies 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 US exchanges.
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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. 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.
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