Beacon Roofing Supply (NASDAQ:BECN) shareholders have earned a 25% CAGR over the last three years

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By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Beacon Roofing Supply, Inc. (NASDAQ:BECN) shareholders have seen the share price rise 93% over three years, well in excess of the market return (45%, not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 12% in the last year.

Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders’ returns.

See our latest analysis for Beacon Roofing Supply

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 three years of share price growth, Beacon Roofing Supply moved from a loss to profitability. That would generally be considered a positive, so we’d expect the share price to be up.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NasdaqGS:BECN Earnings Per Share Growth August 11th 2022

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worth while taking a look at our free report on Beacon Roofing Supply’s earnings, revenue and cash flow.

A Different Perspective

It’s good to see that Beacon Roofing Supply has rewarded shareholders with a total shareholder return of 12% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8% 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. It’s always interesting to track share price performance over the longer term. But to understand Beacon Roofing Supply better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we’ve spotted with Beacon Roofing Supply (including 1 which doesn’t sit too well with us) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.



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2022-08-11 15:48:00

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