The 5.8% return this week takes Veeco Instruments' (NASDAQ:VECO) shareholders five-year gains to 73%

Veeco Instruments Inc. (NASDAQ:VECO) shareholders might be concerned after seeing the share price drop 13% in the last quarter. But the silver lining is the stock is up over five years. In that time, it is up 73%, which isn't bad, but is below the market return of 94%. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 22% decline over the last twelve months.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

See our latest analysis for Veeco Instruments

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 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.

During the five years of share price growth, Veeco Instruments moved from a loss to profitability. That would generally be considered a positive, so we'd hope to see the share price to rise. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Veeco Instruments share price is down 5.2% in the last three years. Meanwhile, EPS is up 57% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -1.8% per year.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that Veeco Instruments has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Veeco Instruments' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Veeco Instruments shareholders are down 22% for the year, but the market itself is up 25%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 12% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 1 warning sign for Veeco Instruments that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.