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We think all investors should try to buy and hold high quality multi-year winners. And highest quality companies can see their share prices grow by huge amounts. For example, the Charles River Laboratories International, Inc. (NYSE:CRL) share price is up a whopping 425% in the last half decade, a handsome return for long term holders. And this is just one example of the epic gains achieved by some long term investors. We note the stock price is up 2.8% in the last seven days.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Charles River Laboratories International
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 five years of share price growth, Charles River Laboratories International achieved compound earnings per share (EPS) growth of 21% per year. This EPS growth is lower than the 39% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 49.10.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Charles River Laboratories International has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's good to see that Charles River Laboratories International has rewarded shareholders with a total shareholder return of 61% in the last twelve months. That's better than the annualised return of 39% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Charles River Laboratories International you should know about.