Optimism for Hilton Grand Vacations (NYSE:HGV) has grown this past week, despite three-year decline in earnings

By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. Just take a look at Hilton Grand Vacations Inc. (NYSE:HGV), which is up 63%, over three years, soundly beating the market return of 45% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 13% in the last year.

Since it's been a strong week for Hilton Grand Vacations shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Hilton Grand Vacations

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-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 the earnings per share (EPS) with the share price.

During three years of share price growth, Hilton Grand Vacations moved from a loss to profitability. So we would expect a higher share price over the period.

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

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. This free interactive report on Hilton Grand Vacations' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Hilton Grand Vacations has rewarded shareholders with a total shareholder return of 13% in the last twelve months. That gain is better than the annual TSR over five years, which is 5%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Hilton Grand Vacations better, we need to consider many other factors. For instance, we've identified 2 warning signs for Hilton Grand Vacations (1 doesn't sit too well with us) that you should be aware of.

Hilton Grand Vacations 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.

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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.

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