AutoZone (NYSE:AZO) shareholders have earned a 26% CAGR over the last five years

When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. Long term AutoZone, Inc. (NYSE:AZO) shareholders would be well aware of this, since the stock is up 222% in five years. The last week saw the share price soften some 2.6%.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for AutoZone

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 five years of share price growth, AutoZone achieved compound earnings per share (EPS) growth of 19% per year. This EPS growth is slower than the share price growth of 26% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

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

This free interactive report on AutoZone's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

AutoZone provided a TSR of 22% over the year. That's fairly close to the broader market return. We should note here that the five-year TSR is more impressive, at 26% per year. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes AutoZone a stock worth watching. It's always interesting to track share price performance over the longer term. But to understand AutoZone better, we need to consider many other factors. For example, we've discovered 3 warning signs for AutoZone (2 don't sit too well with us!) that you should be aware of before investing here.

We will like AutoZone better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.