Merit Medical Systems' (NASDAQ:MMSI) three-year earnings growth trails the splendid shareholder returns

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. To wit, the Merit Medical Systems, Inc. (NASDAQ:MMSI) share price has flown 139% in the last three years. Most would be happy with that. And in the last week the share price has popped 3.7%.

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

Check out our latest analysis for Merit Medical Systems

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, Merit Medical Systems achieved compound earnings per share growth of 136% per year. The average annual share price increase of 34% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. Of course, with a P/E ratio of 53.51, the market remains optimistic.

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

We know that Merit Medical Systems has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Merit Medical Systems' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Merit Medical Systems shareholders have received a total shareholder return of 7.6% over the last year. However, the TSR over five years, coming in at 10% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Merit Medical Systems better, we need to consider many other factors. Take risks, for example - Merit Medical Systems has 1 warning sign we think you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

What are the risks and opportunities for Merit Medical Systems?

NasdaqGS:MMSI

Merit Medical Systems

Merit Medical Systems, Inc. designs, develops, manufactures, and markets single-use medical products for interventional, diagnostic, and therapeutic procedures, primarily in cardiology, radiology, oncology, critical care, and endoscopy.Show more

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Rewards

• Earnings are forecast to grow 19.99% per year

• Earnings grew by 53.8% over the past year

Risks

• Significant insider selling over the past 3 months

View all Risks and Rewards

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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.