Did Business Growth Power Qualys’s (NASDAQ:QLYS) Share Price Gain of 226%?

Qualys, Inc. (NASDAQ:QLYS) shareholders might be concerned after seeing the share price drop 11% in the last month. But that doesn’t change the fact that the returns over the last three years have been very strong. The share price marched upwards over that time, and is now 226% higher than it was. To some, the recent share price pullback wouldn’t be surprising after such a good run. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

View our latest analysis for Qualys

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 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).

Qualys was able to grow its EPS at 47% per year over three years, sending the share price higher. Notably, the 48% average annual share price gain matches up nicely with the EPS growth rate. This observation indicates that the market’s attitude to the business hasn’t changed all that much. Au contraire, the share price change has arguably mimicked the EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NasdaqGS:QLYS Past and Future Earnings, March 8th 2019

We know that Qualys has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Qualys’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We’re pleased to report that Qualys shareholders have received a total shareholder return of 5.4% over one year. However, that falls short of the 25% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.