Did You Miss Eagle Materials' (NYSE:EXP) 95% Share Price Gain?

By
Simply Wall St
Published
July 07, 2021
NYSE:EXP
Source: Shutterstock

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Eagle Materials Inc. (NYSE:EXP) share price is 95% higher than it was a year ago, much better than the market return of around 41% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 30% higher than it was three years ago.

Check out our latest analysis for Eagle Materials

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During the last year Eagle Materials grew its earnings per share (EPS) by 46%. The share price gain of 95% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NYSE:EXP Earnings Per Share Growth July 7th 2021

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

A Different Perspective

It's nice to see that Eagle Materials shareholders have received a total shareholder return of 95% over the last year. And that does include the dividend. That's better than the annualised return of 12% 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. Case in point: We've spotted 2 warning signs for Eagle Materials you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.