The simplest way to invest in stocks is to buy exchange traded funds. But you can do a lot better than that by buying good quality businesses for attractive prices. For example, the Sykes Enterprises, Incorporated (NASDAQ:SYKE) share price is 52% higher than it was five years ago, which is more than the market average. It’s also good to see a healthy gain of 28% in the last year.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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 five years of share price growth, Sykes Enterprises achieved compound earnings per share (EPS) growth of 5.1% per year. This EPS growth is lower than the 8.7% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That’s not necessarily surprising considering the five-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Sykes Enterprises has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Sykes Enterprises will grow revenue in the future.
A Different Perspective
It’s good to see that Sykes Enterprises has rewarded shareholders with a total shareholder return of 28% in the last twelve months. That gain is better than the annual TSR over five years, which is 8.7%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. If you would like to research Sykes Enterprises in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Sykes Enterprises may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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 email@example.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.
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