After buying shares in a company (assuming no leverage), the worst possible outcome is to lose all of your investment. But on the bright side, if you buy shares in a good company at the right price, you can make more than 100%. For example, Option Care Health, Inc. (NASDAQ:OPCH) shares have risen an astounding 137% over the past five years. Meanwhile, the stock is 5.1% higher than it was a week ago.
Given the strong seven-day performance, let's take a look at how the company's fundamentals have helped drive long-term shareholder returns.
Check out our latest analysis for OptionCare Health
While the efficient market 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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over the past five years, Option Care Health has become profitable, and such a change could be a turning point that justifies a big increase in the stock price, as we've seen here.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Earnings per Share Growth
It's good to see that insiders have been buying shares in the last twelve months. Still, future earnings are much more important to whether current shareholders will make money. Before buying or selling shares, we always recommend a closer look at historic growth trends, which you can find here.
A different perspective
Option Care Health shareholders are down 9.7% this year, while the market itself is up 27%. However, keep in mind that even the best stocks can underperform the market over a twelve month period. On the bright side, long term shareholders have been profitable, with a gain of 19% per year over five years. If the fundamental data continues to point to sustainable growth over the long term, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to gain real insight, you need to consider other information as well. For example, we've identified 1 warning sign for Option Care Health you should be aware of.
There are plenty of other companies where insiders have been buying up shares, so you probably don't want to miss this free list of undervalued small companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
