The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is SPX Technologies, Inc. (NYSE:SPXC) which saw its share price drive 268% higher over five years. In more good news, the share price has risen 12% in thirty days. We note that SPX Technologies reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.

Since the stock has added US$600m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for SPX Technologies

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

Over half a decade, SPX Technologies managed to grow its earnings per share at 16% a year. This EPS growth is slower than the share price growth of 30% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 46.13.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that SPX Technologies has improved its bottom line lately, but is it going to grow revenue? Check if analysts think SPX Technologies will grow revenue in the future.

A Different Perspective

It's good to see that SPX Technologies has rewarded shareholders with a total shareholder return of 103% in the last twelve months. That gain is better than the annual TSR over five years, which is 30%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 1 warning sign for SPX Technologies that you should be aware of.

We will like SPX Technologies better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

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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.