For many, the main point of investing in the stock market is to achieve spectacular returns. And highest quality companies can see their share prices grow by huge amounts. Don't believe it? Then look at the Agilysys, Inc. (NASDAQ:AGYS) share price. It's 326% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. It's also up 8.2% in about a month. But the price may well have benefitted from a buoyant market, since stocks have gained 3.5% in the last thirty days.

Since the stock has added US$151m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years of share price growth, Agilysys moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

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

We know that Agilysys has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Agilysys' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Agilysys shareholders are up 2.1% for the year. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 34% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Agilysys better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with Agilysys (including 2 which shouldn't be ignored) .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.