NASDAQ:IIVI) share price has had a bad week, falling 15%. But that scarcely detracts from the really solid long term returns generated by the company over five years. In fact, the share price is 162% higher today. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Of course, that doesn’t necessarily mean it’s cheap now.” data-reactid=”28″>The II-VI Incorporated (NASDAQ:IIVI) share price has had a bad week, falling 15%. But that scarcely detracts from the really solid long term returns generated by the company over five years. In fact, the share price is 162% higher today. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Of course, that doesn’t necessarily mean it’s cheap now.
See our latest analysis for II-VI ” data-reactid=”29″> See our latest analysis for II-VI
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).
II-VI’s earnings per share are down 20% per year, despite strong share price performance over five years. The impact of extraordinary items on earnings, in the last year, partially explain the diversion.
Essentially, it doesn’t seem likely that investors are focused on EPS. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.
On the other hand, II-VI’s revenue is growing nicely, at a compound rate of 21% over the last five years. In that case, the company may be sacrificing current earnings per share to drive growth.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
report showing analyst consensus estimates for future profits.” data-reactid=”51″>II-VI is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling II-VI stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
We’ve identified 2 warning signs with II-VI , and understanding them should be part of your investment process.” data-reactid=”53″>II-VI shareholders are up 14% for the year. But that return falls short of the market. On the bright side, the longer term returns (running at about 21% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with II-VI , and understanding them should be part of your investment process.
collection of growth stocks.” data-reactid=”54″>Of course II-VI may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”56″>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. 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.