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

Addus HomeCare Corporation (NASDAQ:ADUS) shareholders might be concerned after seeing the share price drop 26% in the last quarter. But the silver lining is the stock is up over five years. In that time, it is up 41%, which isn't bad, but is below the market return of 139%.

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

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

Over half a decade, Addus HomeCare managed to grow its earnings per share at 17% a year. This EPS growth is higher than the 7% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

While the broader market gained around 12% in the last year, Addus HomeCare shareholders lost 7.4%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. If you would like to research Addus HomeCare in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.