Diversification is a key tool for dealing with stock price volatility. But the goal is to pick stocks that do better than average. One such company is Meridian Bioscience, Inc. (NASDAQ:VIVO), which saw its share price increase 48% in the last year, slightly above the market return of around 44% (not including dividends). Looking back further, the stock price is 42% higher than it was three years ago.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).
During the last year Meridian Bioscience grew its earnings per share (EPS) by 305%. It's fair to say that the share price gain of 48% did not keep pace with the EPS growth. So it seems like the market has cooled on Meridian Bioscience, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.36.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Meridian Bioscience's earnings, revenue and cash flow.
A Different Perspective
Meridian Bioscience shareholders have received returns of 48% over twelve months, which isn't far from the general market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 4% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand Meridian Bioscience better, we need to consider many other factors. Even so, be aware that Meridian Bioscience is showing 3 warning signs in our investment analysis , and 1 of those is significant...
Meridian Bioscience is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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