Yahoo Finance Light & Wonder (NASDAQ:LNW) shareholders have earned a 42% CAGR over the last five years
We think all investors should try to buy and hold high quality multi-year winners. And we've seen some truly amazing gains over the years. To wit, the Light & Wonder, Inc. (NASDAQ:LNW) share price has soared 485% over five years. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 14% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Check out our latest analysis for Light & Wonder
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.
During the five years of share price growth, Light & Wonder moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how Light & Wonder has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Light & Wonder's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Light & Wonder shareholders have received a total shareholder return of 43% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 42% 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 Light & Wonder better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Light & Wonder you should be aware of, and 1 of them is significant.
For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
