Alpha and Omega Semiconductor's (NASDAQ:AOSL) three-year earnings growth trails the incredible shareholder returns

We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. One such superstar is Alpha and Omega Semiconductor Limited (NASDAQ:AOSL), which saw its share price soar 458% in three years. It's even up 19% in the last week.

The past week has proven to be lucrative for Alpha and Omega Semiconductor investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Alpha and Omega Semiconductor

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During three years of share price growth, Alpha and Omega Semiconductor achieved compound earnings per share growth of 381% per year. The average annual share price increase of 77% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 3.49 also reflects the negative sentiment around the stock.

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

We know that Alpha and Omega Semiconductor has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Alpha and Omega Semiconductor stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Alpha and Omega Semiconductor shareholders have received a total shareholder return of 66% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 28% 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. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Alpha and Omega Semiconductor (of which 2 can't be ignored!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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. 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.