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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 in contrast you can make much more than 100% if the company does well. For instance the Boot Barn Holdings, Inc. (NYSE:BOOT) share price is 296% higher than it was three years ago. Most would be happy with that. It's also up 36% in about a month.
View our latest analysis for Boot Barn Holdings
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Boot Barn Holdings was able to grow its EPS at 54% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 58% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Quite to the contrary, the share price has arguably reflected the EPS growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Boot Barn Holdings 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 nice to see that Boot Barn Holdings shareholders have gained 72% (in total) over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 58%. Given the track record of solid returns over varying time frames, it might be worth putting Boot Barn Holdings on your watchlist. If you would like to research Boot Barn Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Boot Barn Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.