Is TransUnion’s (NYSE:TRU) Share Price Gain Of 151% Well Earned?

The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For example, the TransUnion (NYSE:TRU) share price has soared 151% in the last three years. How nice for those who held the stock!

See our latest analysis for TransUnion

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years of share price growth, TransUnion achieved compound earnings per share growth of 92% per year. This EPS growth is higher than the 36% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat.

You can see how EPS has changed over time in the image below.

NYSE:TRU Past and Future Earnings, October 23rd 2019
NYSE:TRU Past and Future Earnings, October 23rd 2019

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on TransUnion’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It’s nice to see that TransUnion shareholders have gained 27% (in total) over the last year. That includes the value of the dividend. The TSR has been even better over three years, coming in at 36% per year. If you would like to research TransUnion in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

But note: TransUnion 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 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.