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We think that it’s fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. But when you hold the right stock for the right time period, the rewards can be truly huge. Take, for example, the Enova International, Inc. (NYSE:ENVA) share price, which skyrocketed 324% over three years. Also pleasing for shareholders was the 13% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 5.2% in 90 days).
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. One flawed but reasonable way to assess how sentiment around a company has changed, is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, Enova International achieved compound earnings per share growth of 16% per year. In comparison, the 62% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That’s not necessarily surprising considering the three-year track record of earnings growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Enova International has improved its bottom line lately, but is it going to grow revenue? So we recommend checking out this free report showing consensus revenue forecasts.
A Different Perspective
Pleasingly, Enova International’s total shareholder return last year was 12%. But the three year TSR of 62% per year is even better. If you would like to research Enova International in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Enova International 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.
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.