The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. Long term Ciena Corporation (NYSE:CIEN) shareholders would be well aware of this, since the stock is up 202% in five years. Also pleasing for shareholders was the 17% gain in the last three months.
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, Ciena achieved compound earnings per share (EPS) growth of 88% per year. The EPS growth is more impressive than the yearly share price gain of 25% over the same period. So it seems the market isn't so enthusiastic about the stock these days.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Ciena has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Ciena will grow revenue in the future.
A Different Perspective
Ciena shareholders gained a total return of 36% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 25% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. Before spending more time on Ciena it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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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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