Jay Bharat Maruti's (NSE:JAYBARMARU) 15% CAGR outpaced the company's earnings growth over the same five-year period
The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market. But Jay Bharat Maruti Limited (NSE:JAYBARMARU) has fallen short of that second goal, with a share price rise of 90% over five years, which is below the market return. Zooming in, the stock is up a respectable 13% in the last year.
Since it's been a strong week for Jay Bharat Maruti shareholders, let's have a look at trend of the longer term fundamentals.
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 five years of share price growth, Jay Bharat Maruti achieved compound earnings per share (EPS) growth of 69% per year. The EPS growth is more impressive than the yearly share price gain of 14% over the same period. So it seems the market isn't so enthusiastic about the stock these days.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Jay Bharat Maruti's key metrics by checking this interactive graph of Jay Bharat Maruti's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Jay Bharat Maruti the TSR over the last 5 years was 97%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's good to see that Jay Bharat Maruti has rewarded shareholders with a total shareholder return of 14% in the last twelve months. And that does include the dividend. Having said that, the five-year TSR of 15% a year, is even better. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Jay Bharat Maruti that you should be aware of.
But note: Jay Bharat Maruti 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 Indian 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.