As CarGurus (NASDAQ:CARG) climbs 9.4% this past week, investors may now be noticing the company's five-year earnings growth

We think intelligent long term investing is the way to go. But no-one is immune from buying too high. Zooming in on an example, the CarGurus, Inc. (NASDAQ:CARG) share price dropped 54% in the last half decade. That's not a lot of fun for true believers. On the other hand the share price has bounced 9.4% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 5.9% in the same period.

While the stock has risen 9.4% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for CarGurus

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.

During five years of share price growth, CarGurus moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

Revenue is actually up 29% over the time period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized 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. You can see what analysts are predicting for CarGurus in this interactive graph of future profit estimates.

A Different Perspective

It's nice to see that CarGurus shareholders have received a total shareholder return of 31% over the last year. That certainly beats the loss of about 9% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Even so, be aware that CarGurus is showing 1 warning sign in our investment analysis , you should know about...

We will like CarGurus 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 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.