If You Had Bought Silicon Laboratories (NASDAQ:SLAB) Shares Five Years Ago You'd Have Earned 240% Returns
Whenever you buy a stock, there is always a chance it could fall 100%. But if you choose a business that is really thriving, you can earn more than 100%. For example, Silicon Laboratories Inc. (NASDAQ: SLAB) stock is up an impressive 240% over the past five years. It's also good to see that the stock's price is up 11% over the last quarter. However, this could be related to the strong market, which is up 7.8% over the past three months.
Check out our latest analysis for Silicon Laboratories
To quote Buffett, “Ships will sail around the world, but the Flat Earth Society will flourish. There will continue to be large discrepancies between price and value in the market place ... 'A flawed but reasonable way of assessing how sentiment has changed in a company is to compare earnings per share (EPS) with the Compare share price.
The earnings per share of Silicon Laboratories has declined by 16% per year despite a strong price development over five years.
In essence, it doesn't seem likely that investors will focus on EPS. Since earnings per share doesn't seem to be in line with the stock price, we'll look at other metrics instead.
On the flip side, Silicon Laboratories sales are growing well at an average rate of 6.5% over the past five years. It is entirely possible that management is currently prioritizing revenue growth over EPS growth.
The company's sales and earnings (over time) are shown in the image below (click to see the exact numbers).
Profit and sales growth
Silicon Laboratories is a well-known stock with plenty of analyst coverage, which suggests some insight into future growth. With so many analyst predictions going on, it might be worth checking out this free consensus estimate chart.
It's nice to see that Silicon Laboratories shareholders received a total return of 73% over the past year. With the one-year TSR outperforming the five-year TSR (the latter is 28% per annum), the stock's performance appears to have been improving lately. Someone with an optimistic outlook might take the recent improvement in TSR as an indication that business itself is getting better with time. While it is worth considering the varying effects of market conditions on the stock price, other factors are even more important. To that end, be sure to read up on the 2 warning signs that we have discovered at Silicon Laboratories (including one that cannot be ignored).
But be aware: Silicon Laboratories may not be the best stocks to buy. So take a look at this free list of interesting companies with a history of earnings growth (and another growth forecast).
Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on US exchanges.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
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