L.B. Foster (NASDAQ:FSTR) delivers shareholders solid 44% CAGR over 3 years, surging 11% in the last week alone

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. To wit, the L.B. Foster Company (NASDAQ:FSTR) share price has flown 200% in the last three years. Most would be happy with that. It's even up 11% in the last week.

The past week has proven to be lucrative for L.B. Foster investors, so let's see if fundamentals drove the company's three-year performance.

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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During three years of share price growth, L.B. Foster moved from a loss to profitability. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that L.B. Foster has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at L.B. Foster's financial health with this free report on its balance sheet.

A Different Perspective

L.B. Foster provided a TSR of 1.9% over the last twelve months. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 15% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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. For example, we've discovered 3 warning signs for L.B. Foster that you should be aware of before investing here.

But note: L.B. Foster may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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