If You Had Bought P.A.M. Transportation Services (NASDAQ:PTSI) Shares Five Years Ago You'd Have Earned 104% Returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) which saw its share price drive 104% higher over five years. Also pleasing for shareholders was the 33% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 19% in 90 days).

Check out our latest analysis for P.A.M. Transportation Services

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, P.A.M. Transportation Services actually saw its EPS drop 7.3% per year.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 4.9% per year is probably viewed as evidence that P.A.M. Transportation Services is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at P.A.M. Transportation Services' financial health with this free report on its balance sheet.

A Different Perspective

P.A.M. Transportation Services shareholders are down 3.4% for the year, but the market itself is up 25%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 15%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for P.A.M. Transportation Services (of which 1 is potentially serious!) you should know about.

Of course P.A.M. Transportation Services may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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