GreenSky, Inc. (NASDAQ:GSKY) shareholders should be happy to see the share price up 18% in the last month. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 63% in that period. So it's good to see it climbing back up. The rise has some hopeful, but turnarounds are often precarious.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
GreenSky saw its EPS decline at a compound rate of 44% per year, over the last three years. This fall in the EPS is worse than the 28% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on GreenSky's earnings, revenue and cash flow.
A Different Perspective
GreenSky produced a TSR of 16% over the last year. Unfortunately this falls short of the market return of around 38%. The silver lining is that the recent rise is far preferable to the annual loss of 18% that shareholders have suffered over the last three years. We hope the turnaround in fortunes continues. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for GreenSky you should know about.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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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