In This Article:
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is Macquarie Technology Group Limited (ASX:MAQ) which saw its share price drive 273% higher over five years. And in the last month, the share price has gained 11%.
While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
See our latest analysis for Macquarie Technology Group
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. 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.
Over half a decade, Macquarie Technology Group managed to grow its earnings per share at 10% a year. This EPS growth is slower than the share price growth of 30% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. This optimism is visible in its fairly high P/E ratio of 67.74.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Macquarie Technology Group has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Macquarie Technology Group will grow revenue in the future.
A Different Perspective
It's nice to see that Macquarie Technology Group shareholders have received a total shareholder return of 38% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 30% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Macquarie Technology Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Macquarie Technology Group that you should be aware of before investing here.
Of course Macquarie Technology Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.