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It hasn't been the best quarter for Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) shareholders, since the share price has fallen 29% in that time. But that doesn't change the fact that the returns over the last five years have been very strong. In fact, the share price is 103% higher today. To some, the recent pullback wouldn't be surprising after such a fast rise. The more important question is whether the stock is too cheap or too expensive today. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 42% decline over the last twelve months.
The past week has proven to be lucrative for Amphastar Pharmaceuticals investors, so let's see if fundamentals drove the company's five-year performance.
View our latest analysis for Amphastar Pharmaceuticals
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.
Over half a decade, Amphastar Pharmaceuticals managed to grow its earnings per share at 24% a year. This EPS growth is higher than the 15% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. The reasonably low P/E ratio of 9.75 also suggests market apprehension.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Amphastar Pharmaceuticals has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Amphastar Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in Amphastar Pharmaceuticals had a tough year, with a total loss of 42%, against a market gain of about 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 15% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Amphastar Pharmaceuticals you should know about.