AutoNation (NYSE:AN) jumps 3.3% this week, though earnings growth is still tracking behind five-year shareholder returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. One great example is AutoNation, Inc. (NYSE:AN) which saw its share price drive 299% higher over five years. We note the stock price is up 3.3% in the last seven days.

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

View our latest analysis for AutoNation

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Over half a decade, AutoNation managed to grow its earnings per share at 34% a year. This EPS growth is reasonably close to the 32% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. Indeed, it would appear the share price is reacting to the EPS.

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

We consider it positive that insiders have made significant purchases in the last year. 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 AutoNation's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that AutoNation shareholders have received a total shareholder return of 29% over the last year. However, that falls short of the 32% TSR per annum it has made for shareholders, each year, over five years. It's always interesting to track share price performance over the longer term. But to understand AutoNation better, we need to consider many other factors. For example, we've discovered 3 warning signs for AutoNation (1 doesn't sit too well with us!) that you should be aware of before investing here.

AutoNation is not the only stock that insiders are buying. For those who like to find lesser know companies 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 American exchanges.

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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.