ACI Worldwide (NASDAQ:ACIW) shareholders YoY returns are lagging the company's 161% one-year earnings growth

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the ACI Worldwide, Inc. (NASDAQ:ACIW) share price is 75% higher than it was a year ago, much better than the market return of around 23% (not including dividends) in the same period. That's a solid performance by our standards! It is also impressive that the stock is up 52% over three years, adding to the sense that it is a real winner.

Although ACI Worldwide has shed US$194m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for ACI Worldwide

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

ACI Worldwide was able to grow EPS by 161% in the last twelve months. This EPS growth is significantly higher than the 75% increase in the share price. So it seems like the market has cooled on ACI Worldwide, despite the growth. Interesting.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how ACI Worldwide has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that ACI Worldwide shareholders have received a total shareholder return of 75% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7% 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. Take risks, for example - ACI Worldwide has 2 warning signs we think you should be aware of.

We will like ACI Worldwide 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.