It might be of some concern to shareholders to see the ZAGG Inc (NASDAQ:ZAGG) share price down 24% in the last month. Looking further back, the stock has generated good profits over five years. Its return of 93% has certainly bested the market return!
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, ZAGG achieved compound earnings per share (EPS) growth of 55% per year. This EPS growth is higher than the 14% average annual increase in the share price. So it seems the market isn’t so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.57.
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 ZAGG has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling ZAGG stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in ZAGG had a tough year, with a total loss of 23%, against a market gain of about 10%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 14% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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.
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 email@example.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.