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Veeva Systems Inc. (NYSE:VEEV) shareholders might be concerned after seeing the share price drop 11% in the last quarter. But at least the stock is up over the last five years. Unfortunately its return of 90% is below the market return of 94%. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 32% decline over the last three years: that's a long time to wait for profits.
The past week has proven to be lucrative for Veeva Systems investors, so let's see if fundamentals drove the company's five-year performance.
See our latest analysis for Veeva Systems
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Over half a decade, Veeva Systems managed to grow its earnings per share at 20% a year. The EPS growth is more impressive than the yearly share price gain of 14% over the same period. So one could conclude that the broader market has become more cautious towards the stock. Having said that, the market is still optimistic, given the P/E ratio of 54.82.
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. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Veeva Systems' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Veeva Systems shareholders gained a total return of 17% during the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 14% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. 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 Veeva Systems you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).