Stock Analysis

Investors Who Bought Ryerson Holding (NYSE:RYI) Shares Five Years Ago Are Now Up 343%

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NYSE:RYI
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For many, the main point of investing in the stock market is to achieve spectacular returns. And highest quality companies can see their share prices grow by huge amounts. Don't believe it? Then look at the Ryerson Holding Corporation (NYSE:RYI) share price. It's 343% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 25% over the last quarter.

Check out our latest analysis for Ryerson Holding

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Ryerson Holding achieved compound earnings per share (EPS) growth of 29% per year. We note, however, that extraordinary items have impacted earnings. This EPS growth is reasonably close to the 35% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Rather, the share price has approximately tracked EPS growth.

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

earnings-per-share-growth
NYSE:RYI Earnings Per Share Growth February 19th 2021

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 Ryerson Holding's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Ryerson Holding shareholders have received a total shareholder return of 53% over one year. That's better than the annualised return of 35% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Ryerson Holding (1 is potentially serious!) that you should be aware of before investing here.

Ryerson Holding is not the only stock that insiders are buying. 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.

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What are the risks and opportunities for Ryerson Holding?

Ryerson Holding Corporation, together with its subsidiaries, processes and distributes industrial metals in the United States, Canada, Mexico, and China.

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Rewards

  • Trading at 6.5% below our estimate of its fair value

  • Earnings grew by 204.6% over the past year

Risks

  • Has a high level of debt

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