Enova International, Inc. (NYSE: ENVA) Shareholders may be worried after seeing the stock price drop 11% in the last quarter. But that doesn’t change the fact that shareholders have received very good returns over the past five years. We think most investors would be happy with the 104% return over this period. We believe it is more important to focus on long-term returns than on short-term returns. Only time will tell if there is still too much optimism currently reflected in the stock price. While the long-term returns are impressive, we have some sympathy for those who bought more recently, given last year’s 17% drop.
Although Enova International lost $56 million of its market capitalization this week, let’s take a look at its longer-term fundamental trends and see if they have generated any returns.
Discover our latest analysis for Enova International
To quote Buffett, “Ships will circumnavigate the globe, but the Flat Earth Society will prosper. There will continue to be wide gaps between price and value in the market…’ An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings by action (EPS) with action price movement.
Over five years of share price growth, Enova International has achieved compound earnings per share (EPS) growth of 43% per year. This EPS growth is greater than the average annual share price increase of 15%. Therefore, it seems that the market has become relatively pessimistic towards the company. The reasonably low P/E ratio of 4.25 also suggests market apprehension.
The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).
We know that Enova International has improved its results over the past three years, but what does the future hold? If you are considering buying or selling shares of Enova International, you should check out this FREE detailed report on its balance sheet.
A different perspective
The 17% total return received by Enova International shareholders over the past year is not far off the market return of -16%. Longer-term investors wouldn’t be so upset, as they would have gained 15%, every year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating trading conditions, this could be an opportunity. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Even so, know that Enova International shows 3 warning signs in our investment analysis you should know…
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Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.