Alpha Pro Tech, Ltd. (NYSEMKT:APT) shareholders might understandably be very concerned that the share price has dropped 30% in the last quarter. But over five years returns have been remarkably great. Indeed, the share price is up a whopping 585% in that time. So we don't think the recent decline in the share price means its story is a sad one. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.
Anyone who held for that rewarding ride would probably be keen to talk about it.
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...' 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.
During five years of share price growth, Alpha Pro Tech achieved compound earnings per share (EPS) growth of 83% per year. This EPS growth is higher than the 47% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.65.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Alpha Pro Tech has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We're pleased to report that Alpha Pro Tech shareholders have received a total shareholder return of 237% over one year. That's better than the annualised return of 47% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Alpha Pro Tech better, we need to consider many other factors. Take risks, for example - Alpha Pro Tech has 2 warning signs we think you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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