If You Had Bought Medpace Holdings (NASDAQ:MEDP) Shares Three Years Ago You'd Have Earned 286% Returns
It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the Medpace Holdings, Inc. (NASDAQ:MEDP) share price is 286% higher than it was three years ago. That sort of return is as solid as granite. In contrast, the stock has fallen 8.5% in the last 30 days. This could be related to the soft market, with stocks down around 1.5% in the last month.
See our latest analysis for Medpace 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.
Medpace Holdings was able to grow its EPS at 55% per year over three years, sending the share price higher. Notably, the 57% average annual share price gain matches up nicely with the EPS growth rate. This suggests that sentiment and expectations have not changed drastically. Rather, the share price has approximately tracked EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Medpace Holdings' earnings, revenue and cash flow.
A Different Perspective
It's nice to see that Medpace Holdings shareholders have gained 95% (in total) over the last year. That's better than the annualized TSR of 57% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Medpace Holdings has 1 warning sign we think you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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