Atlas Air Worldwide Holdings (NASDAQ:AAWW) lifts 3.5% this week, taking five-year gains to 92%

The main point of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) share price is up 92% in the last five years, that's less than the market return. On a brighter note, more newer shareholders are probably rather content with the 23% share price gain over twelve months.

Since the stock has added US$75m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Atlas Air Worldwide Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the last half decade, Atlas Air Worldwide Holdings became profitable. That's generally thought to be a genuine positive, so we would expect to see an increasing share price. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Atlas Air Worldwide Holdings share price is up 18% in the last three years. In the same period, EPS is up 34% per year. This EPS growth is higher than the 6% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This unenthusiastic sentiment is reflected in the stock's reasonably modest P/E ratio of 4.81.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Atlas Air Worldwide Holdings has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Atlas Air Worldwide Holdings shareholders are up 23% for the year. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 14% over half a decade It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand Atlas Air Worldwide Holdings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Atlas Air Worldwide Holdings (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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