Addus HomeCare (NASDAQ:ADUS) stock performs better than its underlying earnings growth over last year

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Addus HomeCare Corporation (NASDAQ:ADUS) share price is up 40% in the last 1 year, clearly besting the market return of around 32% (not including dividends). That's a solid performance by our standards! And shareholders have also done well over the long term, with an increase of 36% in the last three years.

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

View our latest analysis for Addus HomeCare

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.

Addus HomeCare was able to grow EPS by 23% in the last twelve months. The share price gain of 40% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago.

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

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

A Different Perspective

We're pleased to report that Addus HomeCare shareholders have received a total shareholder return of 40% over one year. That's better than the annualised return of 6% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Addus HomeCare is showing 2 warning signs in our investment analysis , you should know about...

But note: Addus HomeCare 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.