Yahoo Finance Regeneron Pharmaceuticals (NASDAQ:REGN) stock performs better than its underlying earnings growth over last three years
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) share price has flown 143% in the last three years. How nice for those who held the stock! It's also good to see the share price up 25% over the last quarter.
Since the stock has added US$14b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Regeneron Pharmaceuticals
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Regeneron Pharmaceuticals achieved compound earnings per share growth of 41% per year. We note that the 35% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This observation indicates that the market's attitude to the business hasn't changed all that much. Rather, the share price has approximately tracked EPS growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
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. Dive deeper into the earnings by checking this interactive graph of Regeneron Pharmaceuticals' earnings, revenue and cash flow.
A Different Perspective
It's good to see that Regeneron Pharmaceuticals has rewarded shareholders with a total shareholder return of 8.7% in the last twelve months. However, the TSR over five years, coming in at 10% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Regeneron Pharmaceuticals better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Regeneron Pharmaceuticals , and understanding them should be part of your investment process.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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