When you invest in a company, there’s always a chance that it may not succeed and you could lose money. However, on the flip side, if you choose to invest in a high-quality company at the right price, you could see returns of well over 100%. Long-term shareholders of Amazon.com, Inc. (NASDAQ:AMZN) have experienced this firsthand, with the stock rising 109% over the past five years. The recent 19% increase in share price over the last quarter could be attributed to the overall strong market performance, which has seen a 12% increase in the last three months.

Following a solid 7-day performance, let’s take a look at how the company’s fundamentals have contributed to long-term shareholder returns.

As Benjamin Graham once said, “Over the short term, the market is a voting machine, but over the long term, it’s a weighing machine.” One way to gauge changes in market sentiment over time is by examining the relationship between a company’s share price and its earnings per share (EPS).

During the five years of share price growth, Amazon.com transitioned from a loss to profitability. This shift to profitability can often signal potential for rapid earnings growth, leading to significant share price gains.

It’s encouraging to note that the CEO of Amazon.com receives more modest compensation compared to other CEOs of similarly sized companies. However, the key question remains whether the company can sustain earnings growth in the future. Before making any investment decisions, it’s advisable to closely analyze historic growth trends.

Looking at a different perspective, Amazon.com shareholders have enjoyed a total shareholder return of 87% over the past year, outperforming the annual TSR over five years at 16%. This positive sentiment around the company suggests that recent improvements in TSR may indicate overall business growth. Investors typically monitor insider transactions for further insights.

While Amazon.com has shown promising returns, it’s always worth exploring other investment opportunities. Check out our list of companies expected to experience earnings growth for potential investment options.

Please note that the market returns mentioned in this article reflect the average returns of stocks currently trading on American exchanges.

Have feedback on this article or concerns about the content? Feel free to get in touch with us directly or email our editorial team at editorial-team@simplywallst.com.

This article by Simply Wall St provides commentary based on historical data and analyst forecasts using an unbiased methodology. It is not financial advice and does not constitute a recommendation to buy or sell any stock. Our analysis aims to offer long-term focused insights driven by fundamental data. Simply Wall St does not hold positions in any stocks mentioned.