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Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Kimball Electronics, Inc. (NASDAQ:KE). Its share price is already up an impressive 135% in the last twelve months. Also pleasing for shareholders was the 45% gain in the last three months. It is also impressive that the stock is up 58% 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.
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.
Kimball Electronics was able to grow EPS by 214% in the last twelve months. This EPS growth is significantly higher than the 135% increase in the share price. So it seems like the market has cooled on Kimball Electronics, despite the growth. Interesting.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Kimball Electronics has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Kimball Electronics' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that Kimball Electronics has rewarded shareholders with a total shareholder return of 135% in the last twelve months. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. 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 Kimball Electronics better, we need to consider many other factors. For example, we've discovered 2 warning signs for Kimball Electronics (1 is a bit concerning!) that you should be aware of before investing here.
We will like Kimball Electronics better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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. 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.
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