The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. For instance the The Simply Good Foods Company (NASDAQ:SMPL) share price is 146% higher than it was three years ago. Most would be happy with that. Also pleasing for shareholders was the 25% gain in the last three months.

See our latest analysis for Simply Good Foods

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 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).

During three years of share price growth, Simply Good Foods achieved compound earnings per share growth of 128% per year. This EPS growth is higher than the 35% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

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

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Simply Good Foods' earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Simply Good Foods shareholders have gained 116% (in total) over the last year. That's better than the annualized TSR of 35% over the last three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Simply Good Foods better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Simply Good Foods you should be aware of, and 1 of them is significant.

Simply Good Foods is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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.

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