Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the CLPS Incorporation (NASDAQ:CLPS) share price is up 30% in the last year, clearly besting the market return of around 25% (not including dividends). That's a solid performance by our standards! CLPS Incorporation hasn't been listed for long, so it's still not clear if it is a long term winner.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the last year CLPS Incorporation grew its earnings per share, moving from a loss to a profit.
When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.
We think that the revenue growth of 38% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of CLPS Incorporation's earnings, revenue and cash flow.
A Different Perspective
CLPS Incorporation shareholders should be happy with the total gain of 30% over the last twelve months. And the share price momentum remains respectable, with a gain of 29% in the last three months. This suggests the company is continuing to win over new investors. 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. Even so, be aware that CLPS Incorporation is showing 4 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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What are the risks and opportunities for CLPS Incorporation?
Price-To-Earnings ratio (8.4x) is below the US market (15x)
High level of non-cash earnings
Does not have a meaningful market cap ($37M)
Shareholders have been diluted in the past year
Profit margins (2.9%) are lower than last year (5.4%)
Volatile share price over the past 3 months
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. 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.
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CLPS Incorporation provides information technology (IT), consulting, and solutions to institutions operating in banking, insurance, and financial sectors in the People’s Republic of China and internationally.
Adequate balance sheet and slightly overvalued.