Recent 3.5% pullback isn’t enough to hurt long-term Supernus Pharmaceuticals (NASDAQ:SUPN) shareholders, they’re still up 64% over 5 years

The simplest way to invest in stocks is to buy exchange traded funds. But in our experience, buying the right stocks can give your wealth a significant boost. For example, the Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) share price is 64% higher than it was five years ago, which is more than the market average. We’re also happy to report the stock is up a healthy 25% in the last year.

Since the long term performance has been good but there’s been a recent pullback of 3.5%, let’s check if the fundamentals match the share price.

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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 five years of share price growth, Supernus Pharmaceuticals actually saw its EPS drop 32% per year. The impact of extraordinary items on earnings, in the last year, partially explain the diversion.

Essentially, it doesn’t seem likely that investors are focused on EPS. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.

On the other hand, Supernus Pharmaceuticals’ revenue is growing nicely, at a compound rate of 4.6% over the last five years. It’s quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Supernus Pharmaceuticals’ financial health with this free report on its balance sheet.

A Different Perspective

It’s good to see that Supernus Pharmaceuticals has rewarded shareholders with a total shareholder return of 25% in the last twelve months. That gain is better than the annual TSR over five years, which is 10%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Supernus Pharmaceuticals it might be wise to click here to see if insiders have been buying or selling shares.

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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.