Stock Analysis

    The Aspen Technology (NASDAQ:AZPN) Share Price Is Up 126% And Shareholders Are Boasting About It

    Source: Shutterstock

    While Aspen Technology, Inc. (NASDAQ:AZPN) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 28% in the last quarter. But in stark contrast, the returns over the last half decade have impressed. Indeed, the share price is up an impressive 126% in that time. We think it's more important to dwell on the long term returns than the short term returns. The more important question is whether the stock is too cheap or too expensive today.

    See our latest analysis for Aspen Technology

    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 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, Aspen Technology achieved compound earnings per share (EPS) growth of 25% per year. This EPS growth is higher than the 18% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.

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

    NasdaqGS:AZPN Past and Future Earnings April 3rd 2020
    NasdaqGS:AZPN Past and Future Earnings April 3rd 2020

    We know that Aspen Technology has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

    A Different Perspective

    While the broader market lost about 13% in the twelve months, Aspen Technology shareholders did even worse, losing 15%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 18% 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. It's always interesting to track share price performance over the longer term. But to understand Aspen Technology better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Aspen Technology you should be aware of.

    Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.

    If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

    We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.