It's always best to build a diverse portfolio of shares, since any stock business could lag the broader market. But if you're going to beat the market overall, you need to have individual stocks that outperform. One such company is Tradeweb Markets Inc. (NASDAQ:TW), which saw its share price increase 41% in the last year, slightly above the market return of around 37% (not including dividends). Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).
Tradeweb Markets was able to grow EPS by 63% in the last twelve months. This EPS growth is significantly higher than the 41% increase in the share price. Therefore, it seems the market isn't as excited about Tradeweb Markets as it was before. This could be an opportunity. Of course, with a P/E ratio of 79.52, the market remains optimistic.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Tradeweb Markets has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
In the last year the market returned about 40%, and Tradeweb Markets generated a TSR of 42% for its shareholders. A substantial portion of that gain has come in the last three months, with the stock up 24% in that time. This suggests the share price maintains some momentum, and investors are taking a more positive view of the stock. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for Tradeweb Markets that you should be aware of before investing here.
Of course Tradeweb Markets 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. 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.
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