When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) share price has soared 134% in the last year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 84% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Also impressive, the stock is up 74% over three years, making long term shareholders happy, too.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Over the last twelve months, Willamette Valley Vineyards actually shrank its EPS by 18%.
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.
Revenue was pretty stable on last year, so deeper research might be needed to explain the share price rise.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Willamette Valley Vineyards stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Willamette Valley Vineyards has rewarded shareholders with a total shareholder return of 134% in the last twelve months. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Willamette Valley Vineyards better, we need to consider many other factors. Even so, be aware that Willamette Valley Vineyards is showing 4 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
But note: Willamette Valley Vineyards 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 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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