Yahoo Finance The 62% return delivered to GoDaddy's (NYSE:GDDY) shareholders actually lagged YoY earnings growth
The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the GoDaddy Inc. (NYSE:GDDY) share price is 62% higher than it was a year ago, much better than the market return of around 25% (not including dividends) in the same period. That's a solid performance by our standards! Also impressive, the stock is up 46% over three years, making long term shareholders happy, too.
Since the stock has added US$748m 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 GoDaddy
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).
During the last year GoDaddy grew its earnings per share (EPS) by 318%. This EPS growth is significantly higher than the 62% increase in the share price. So it seems like the market has cooled on GoDaddy, 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 GoDaddy has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
It's nice to see that GoDaddy shareholders have received a total shareholder return of 62% over the last year. That's better than the annualised return of 9% 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. 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. For instance, we've identified 4 warning signs for GoDaddy (1 shouldn't be ignored) that you should be aware of.
But note: GoDaddy may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
