Encore Capital Group (NASDAQ:ECPG) delivers shareholders favorable 7.3% CAGR over 5 years, surging 6.7% in the last week alone

The main point of investing for the long term is to make money. Better yet, you'd like to see the share price move up more than the market average. But Encore Capital Group, Inc. (NASDAQ:ECPG) has fallen short of that second goal, with a share price rise of 43% over five years, which is below the market return. The last year hasn't been great either, with the stock up just 3.0%.

Since it's been a strong week for Encore Capital Group shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Encore Capital Group

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. 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.

During five years of share price growth, Encore Capital Group actually saw its EPS drop 29% per year. This was, in part, due to extraordinary items impacting earning in the last twelve months.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

The revenue reduction of 3.1% per year is not a positive. So it seems one might have to take closer look at earnings and revenue trends to see how they might influence the share price.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Encore Capital Group stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Encore Capital Group shareholders are up 3.0% for the year. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 7% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Encore Capital Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Encore Capital Group that you should be aware of.

But note: Encore Capital Group 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 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.