Yahoo Finance Did Business Growth Power Boston Scientific's (NYSE:BSX) Share Price Gain of 125%?
When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Boston Scientific Corporation (NYSE:BSX) share price has soared 125% in the last half decade. Most would be very happy with that. It's also up 15% in about a month. But the price may well have benefitted from a buoyant market, since stocks have gained 6.3% in the last thirty days.
View our latest analysis for Boston Scientific
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, Boston Scientific moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. Indeed, the Boston Scientific share price has gained 50% in three years. During the same period, EPS grew by 75% each year. This EPS growth is higher than the 15% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Boston Scientific has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Boston Scientific stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in Boston Scientific had a tough year, with a total loss of 6.2%, against a market gain of about 13%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 18% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Take risks, for example - Boston Scientific has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
For those who like to find winning investments this free list of growing 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 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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