Did LifeVantage’s (NASDAQ:LFVN) Share Price Deserve to Gain 21%?

If you buy and hold a stock for many years, you’d hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the LifeVantage Corporation (NASDAQ:LFVN) share price is up 21% in the last five years, that’s less than the market return. Zooming in, the stock is up a respectable 16% in the last year.

See our latest analysis for LifeVantage

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.

LifeVantage’s earnings per share are down 4.0% per year, despite strong share price performance over five years. With EPS falling, but a modestly increasing share price, it seems that the market was probably too pessimistic about the stock in the past. Having said that, if the EPS falls continue we’d be surprised to see a sustained increase in share price.

NasdaqCM:LFVN Past and Future Earnings, August 14th 2019
NasdaqCM:LFVN Past and Future Earnings, August 14th 2019

Dive deeper into LifeVantage’s key metrics by checking this interactive graph of LifeVantage’s earnings, revenue and cash flow.

A Different Perspective

It’s good to see that LifeVantage has rewarded shareholders with a total shareholder return of 16% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3.8% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. If you would like to research LifeVantage 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 growing 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 US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.