The worst outcome after buying shares in a company (assuming there is no leverage) would be if you lost all the money you invested. But if you choose a business that is truly thriving, you can do that make more than 100%. For example this Generac Holdings Inc. (NYSE:GNRC) The stock price is up 106% over the last half decade. Most people would be very happy about that. The growth of 15% in the last three months was also pleasing for shareholders.

Let’s examine how the company’s fundamentals have played a role in driving long-term shareholder returns with a solid 7-day performance.

Check out our latest analysis for Generac Holdings

While markets are an effective pricing mechanism, stock prices reflect investor sentiment and not just underlying business performance. One flawed but reasonable way to assess how sentiment towards a company has changed is to compare the earnings per share (EPS) with the share price.

Generac Holdings’ earnings per share have declined 0.5% per year, despite strong share price performance over five years.

Looking at these numbers, we assume that the decline in earnings per share is not representative of how the company has changed over the years. Therefore, it is worth taking a look at other metrics to try to understand share price movements.

On the other hand, Generac Holdings’ revenue is growing nicely, at an average rate of 15% over the past five years. In this case, the company may sacrifice current earnings per share to drive growth.

The image below shows how earnings and revenue have changed over time (if you click on the image you can see greater detail).

Generac Holdings is a well-known stock with extensive analyst coverage, suggesting some visibility into future growth. Therefore, it makes a lot of sense to find out what analysts expect Generac Holdings to earn in the future (free analyst consensus estimates).

A different perspective

It’s good to see that Generac Holdings shareholders received a total return of 53% over the last year. This increase is better than the five-year annual TSR, which is 16%. Therefore, sentiment around the company seems to be positive lately. As share price momentum remains strong, it might be worth taking a closer look at the stock so you don’t miss out on an opportunity. While it’s well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. However, keep in mind that Generac Holdings is in the spotlight 1 warning sign in our investment analysis this is what you should know…

We’ll like Generac Holdings better if we see some big insider buying. Check this out while we wait free List of undervalued stocks (mainly small caps) with significant, recent insider buying.

Please note that 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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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.