Investors Who Bought Cerence (NASDAQ:CRNC) Shares A Year Ago Are Now Up 236%

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Cerence Inc. (NASDAQ:CRNC) share price has soared 236% return in just a single year. Also pleasing for shareholders was the 24% gain in the last three months. Cerence hasn't been listed for long, so it's still not clear if it is a long term winner.

See our latest analysis for Cerence

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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Cerence was able to grow EPS by 387% in the last twelve months. This EPS growth is significantly higher than the 236% increase in the share price. Therefore, it seems the market isn't as excited about Cerence as it was before. This could be an opportunity.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Cerence's earnings, revenue and cash flow.

A Different Perspective

Cerence boasts a total shareholder return of 236% for the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 24%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). 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. To that end, you should be aware of the 3 warning signs we've spotted with Cerence .

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.

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@simplywallst.com.