Earnings growth outpaced the decent 46% return delivered to Upwork (NASDAQ:UPWK) shareholders over the last year

Upwork Inc. (NASDAQ:UPWK) shareholders might be concerned after seeing the share price drop 25% in the last quarter. While that might be a setback, it doesn't negate the nice returns received over the last twelve months. To wit, it had solidly beat the market, up 46%.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

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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.

During the last year Upwork grew its earnings per share (EPS) by 233%. This EPS growth is significantly higher than the 46% increase in the share price. Therefore, it seems the market isn't as excited about Upwork as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.12.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how Upwork has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Upwork stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Upwork shareholders have received a total shareholder return of 46% over the last year. Notably the five-year annualised TSR loss of 2% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Upwork better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Upwork (at least 2 which are concerning) , and understanding them should be part of your investment process.

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 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.