Perion Network Ltd. (NASDAQ:PERI) shareholders might be concerned after seeing the share price drop 14% in the last month. But that doesn't change the fact that the returns over the last three years have been spectacular. Indeed, the share price is up a whopping 510% in that time. As long term investors the recent fall doesn't detract all that much from the longer term story. Only time will tell if there is still too much optimism currently reflected in the share price. It really delights us to see such great share price performance for investors.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for Perion Network

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).

Perion Network was able to grow its EPS at 47% per year over three years, sending the share price higher. This EPS growth is lower than the 83% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It is of course excellent to see how Perion Network has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Perion Network stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Perion Network has rewarded shareholders with a total shareholder return of 20% in the last twelve months. Having said that, the five-year TSR of 32% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Perion Network better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Perion Network you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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 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.