The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. For example, the CyberArk Software Ltd. (NASDAQ:CYBR) share price has soared 159% in the last three years. That sort of return is as solid as granite. In more good news, the share price has risen -0.9% in thirty days.
View our latest analysis for CyberArk Software
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
During three years of share price growth, CyberArk Software achieved compound earnings per share growth of 2.9% per year. This EPS growth is lower than the 37% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 126.57.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into CyberArk Software's key metrics by checking this interactive graph of CyberArk Software's earnings, revenue and cash flow.
A Different Perspective
CyberArk Software shareholders gained a total return of 14% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 20% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - CyberArk Software has 3 warning signs we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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