Malibu Boats' (NASDAQ:MBUU) Wonderful 504% Share Price Increase Shows How Capitalism Can Build Wealth

[view original post]

We think all investors should try to buy and hold high quality multi-year winners. And we’ve seen some truly amazing gains over the years. For example, the Malibu Boats, Inc. (NASDAQ:MBUU) share price is up a whopping 504% in the last half decade, a handsome return for long term holders. And this is just one example of the epic gains achieved by some long term investors. In more good news, the share price has risen 0.3% in thirty days.

It really delights us to see such great share price performance for investors.

See our latest analysis for Malibu Boats

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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, Malibu Boats managed to grow its earnings per share at 28% a year. This EPS growth is slower than the share price growth of 43% 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. That’s not necessarily surprising considering the five-year track record of earnings growth.

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

earnings-per-share-growth

It is of course excellent to see how Malibu Boats has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Malibu Boats shareholders gained a total return of 30% during the year. But that was short of the market average. It’s probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 43% over five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Malibu Boats is showing 1 warning sign in our investment analysis , you should know about…

Of course Malibu Boats may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.