Cavco Industries (NASDAQ:CVCO) shareholders have earned a 32% CAGR over the last three years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For instance the Cavco Industries, Inc. (NASDAQ:CVCO) share price is 129% higher than it was three years ago. How nice for those who held the stock! On top of that, the share price is up 17% in about a quarter.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Cavco Industries

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.

Cavco Industries was able to grow its EPS at 46% per year over three years, sending the share price higher. The average annual share price increase of 32% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.93.

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

It is of course excellent to see how Cavco Industries has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Cavco Industries' financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Cavco Industries shareholders have received a total shareholder return of 6.9% over the last year. Having said that, the five-year TSR of 10% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Cavco Industries better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Cavco Industries , and understanding them should be part of your investment process.

Of course Cavco Industries 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. 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.