P.A.M. Transportation Services (NASDAQ:PTSI) jumps 19% this week, though earnings growth is still tracking behind five-year shareholder returns

By
Simply Wall St
Published
October 16, 2021
NasdaqGM:PTSI
Source: Shutterstock

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. To wit, the P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) share price has soared 455% over five years. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 88% over the last quarter.

Since it's been a strong week for P.A.M. Transportation Services shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for P.A.M. Transportation Services

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last half decade, P.A.M. Transportation Services became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NasdaqGM:PTSI Earnings Per Share Growth October 17th 2021

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of P.A.M. Transportation Services' earnings, revenue and cash flow.

A Different Perspective

It's good to see that P.A.M. Transportation Services has rewarded shareholders with a total shareholder return of 153% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 41% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with P.A.M. Transportation Services , and understanding them should be part of your investment process.

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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