For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. Don't believe it? Then look at the Elektron Technology plc (LON:EKT) share price. It's 1020% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. It's also good to see the share price up 12% over the last quarter.
It really delights us to see such great share price performance for investors.
View our latest analysis for Elektron Technology
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the five years of share price growth, Elektron Technology moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Elektron Technology has grown profits over the years, but the future is more important for shareholders. This free interactive report on Elektron Technology's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that Elektron Technology has rewarded shareholders with a total shareholder return of 29% in the last twelve months. However, the TSR over five years, coming in at 62% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. Is Elektron Technology cheap compared to other companies? These 3 valuation measures might help you decide.
Of course Elektron Technology 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 GB exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.