Advanced Micro Devices (NASDAQ:AMD) investors will be pleased with a massive 406% return over the past five years

Long-term investing can be life-changing when you buy and hold really great companies. While not every stock does well, when investors win, they can win big. For example, Advanced Microprocessor Devices, Inc. The stock (NASDAQ:AMD) is up a whopping 406% over the past five years, which is a hefty gain for long-term holders. If that doesn’t make you want to invest in the long term, we don’t know what will. We note that the stock is up 1.2% over the past seven days.

It is also worth looking at the company’s fundamental metrics, as this will help us determine whether the long-term rate of return to shareholders is adequate to the results of the core business activities.

Check out our latest analysis on advanced micro devices

While the efficient markets hypothesis is still taught by some, it has been proven that markets are overly reactive dynamic systems and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare earnings per share (EPS) to the share price.

During five years of share price growth, Advanced Micro Devices has achieved compound earnings per share (EPS) growth of 21% per year. This EPS growth is lower than the average annual share price growth of 38%. This suggests that market participants currently have a higher regard for this company. And that’s not shocking, given its growth history. This positive sentiment is reflected in the (fairly optimistic) P/E ratio of 234.93.

Below you can see how EPS has changed over time (you can find the exact values by clicking on the image).

We know that Advanced Micro Devices has recently improved its financial results, but will it increase revenue? You can check it out free a report showing analysts’ revenue forecasts.

Another perspective

It’s good to see that Advanced Micro Devices shareholders have received a total shareholder return of 40% over the last year. That’s better than the annualized return of 38% over half a decade, which suggests that the company has been doing better recently. An optimistic person could take the recent improvement in TSR as an indication that the company itself is getting better over time. If you want to investigate Advanced Micro Devices in more detail, you can check out whether insiders have been buying or selling shares of the company.

If you like buying stocks with management, you might like this free list of companies. (Hint: many of them remain unnoticed and their valuations are attractive.)

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

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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