While Beazer Homes USA, Inc. (NYSE:BZH) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 30% in the last quarter. But that doesn’t change the fact that shareholders have received really good returns over the last five years. Indeed, the share price is up an impressive 277% in that time. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Of course, that doesn’t necessarily mean it’s cheap now.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

Check out our latest analysis for Beazer Homes USA

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 the five years of share price growth, Beazer Homes USA moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It’s good to see that there was some significant insider buying in the last three months. That’s a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Beazer Homes USA’s earnings, revenue and cash flow.

Beazer Homes USA shareholders are down 26% for the year, but the market itself is up 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 30% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Beazer Homes USA (of which 1 is a bit concerning!) you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).