Tradeweb Markets' (NASDAQ:TW) five-year earnings growth trails the 23% YoY shareholder returns

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Tradeweb Markets Inc. (NASDAQ:TW) which saw its share price drive 178% higher over five years. Better yet, the share price has risen 5.6% in the last week.

The past week has proven to be lucrative for Tradeweb Markets investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Tradeweb Markets

There is no denying that markets are sometimes efficient, but prices do not always reflect 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, Tradeweb Markets achieved compound earnings per share (EPS) growth of 33% per year. The EPS growth is more impressive than the yearly share price gain of 23% over the same period. Therefore, it seems the market has become relatively pessimistic about the company. Having said that, the market is still optimistic, given the P/E ratio of 57.05.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Tradeweb Markets has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Tradeweb Markets will grow revenue in the future.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Tradeweb Markets, it has a TSR of 184% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Tradeweb Markets has rewarded shareholders with a total shareholder return of 28% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 23% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Tradeweb Markets it might be wise to click here to see if insiders have been buying or selling shares.

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 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.