Investors in Beazer Homes USA (NYSE:BZH) have seen impressive returns of 160% over the past five years

Some Beazer Homes USA, Inc. (NYSE:BZH) shareholders are probably rather concerned to see the share price fall 34% over the last three months. But in stark contrast, the returns over the last half decade have impressed. It’s fair to say most would be happy with 160% the gain in that time. To some, the recent pullback wouldn’t be surprising after such a fast rise. Only time will tell if there is still too much optimism currently reflected in the share price.

So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.

See our latest analysis for Beazer Homes USA

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last half decade, Beazer Homes USA became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Beazer Homes USA share price is up 92% in the last three years. In the same period, EPS is up 81% per year. This EPS growth is higher than the 24% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is

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