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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 if you buy shares in a really great company, you can more than double your money. To wit, the Natural Gas Services Group, Inc. (NYSE:NGS) share price has flown 131% in the last three years. That sort of return is as solid as granite. It's also up 19% in about a month. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report.
So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.
Check out our latest analysis for Natural Gas Services Group
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.
Natural Gas Services Group became profitable within the last three years. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Natural Gas Services Group's earnings, revenue and cash flow.
A Different Perspective
It's nice to see that Natural Gas Services Group shareholders have received a total shareholder return of 104% over the last year. That's better than the annualised return of 12% 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. For example, we've discovered 3 warning signs for Natural Gas Services Group (2 make us uncomfortable!) that you should be aware of before investing here.
Of course Natural Gas Services Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.