Yahoo Finance Did Business Growth Power Sleep Number's (NASDAQ:SNBR) Share Price Gain of 114%?
It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. To wit, the Sleep Number Corporation (NASDAQ:SNBR) share price has flown 114% in the last three years. Most would be happy with that. On top of that, the share price is up 12% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 6.6% in 90 days).
Check out our latest analysis for Sleep Number
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Sleep Number was able to grow its EPS at 91% per year over three years, sending the share price higher. This EPS growth is higher than the 29% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Sleep Number 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 Sleep Number stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that Sleep Number shareholders have received a total shareholder return of 30% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 13% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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.
Of course Sleep Number may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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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.
