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Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Travelzoo (NASDAQ:TZOO) share price has soared 131% return in just a single year. Also pleasing for shareholders was the 65% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. It is also impressive that the stock is up 94% over three years, adding to the sense that it is a real winner.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
Check out our latest analysis for Travelzoo
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 last year Travelzoo grew its earnings per share (EPS) by 35%. This EPS growth is significantly lower than the 131% increase in the share price. This indicates that the market is now more optimistic about the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
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 Travelzoo's earnings, revenue and cash flow.
A Different Perspective
It's good to see that Travelzoo has rewarded shareholders with a total shareholder return of 131% in the last twelve months. That's better than the annualised return of 15% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Travelzoo better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Travelzoo you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.