We think it’s fair to say that the ability to find fantastic multi-year winners is what drives many investors. You won’t succeed every time, but when you do, the returns can be truly splendid. Take, for example, the Nordic Semiconductor ASA (OB: NOD) share price, which has climbed 882% in three years. Another good news is that the share price has climbed 18% in thirty days. Anyone who has stood for this rewarding race would probably want to talk about it.
While the past week has hurt the company’s three-year performance, let’s take a look at recent trends in the underlying business and see if the gains have been aligned.
Check out our latest review for Nordic Semiconductor
While the markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
During the three years of share price growth, Nordic Semiconductor achieved growth in compound earnings per share of 71% per year. This EPS growth is lower than the 114% average annual increase in the share price. This indicates that the market is feeling more optimistic about the stock, after the last few years of progress. It’s quite common for investors to fall in love with a company after a few years of solid progress. This optimism is also reflected in the rather generous P / E ratio of 99.30.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
It’s good to see that there have been some significant insider buys over the past three months. This is a positive point. That said, we believe earnings and revenue growth trends are even more important factors to consider. Dive deeper into earnings by viewing this interactive graph of Nordic Semiconductor earnings, revenue and cash flow.
A different perspective
It is good to see that Nordic Semiconductor has rewarded its shareholders with a total shareholder return of 131% over the past twelve months. This is better than the 54% annualized return over half a decade, which implies that the company has been doing better recently. At the best of times, this can portend real business momentum, meaning that now may be a good time to dig deep. Investors who like to make money usually check insider buys, such as the price paid and the total amount bought. You can read more about Nordic Semiconductor Insider Buying by clicking on this link.
There are many other companies in which insiders buy shares. You probably do not want to miss it free list of growing companies that insiders buy.
Please note that the market returns quoted in this article reflect the average market weighted returns of stocks that are currently trading on NO stock exchange.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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