Sundram Fasteners’ (NSE:SUNDRMFAST) five-year earnings growth lags splendid shareholder returns
When you buy a stock, there is always a chance that it will drop 100%. But on a lighter note, a good company can see its stock price soar well over 100%. Long term Sundram Fasteners Limited (NSE:SUNDRMFAST) shareholders would be well aware of this, as the stock has risen 193% in five years. Meanwhile, the stock price is 3.2% higher than it was a week ago.
Based on a strong 7-day performance, let’s check what role company fundamentals have played in driving long-term shareholder returns.
Check out our latest analysis for Sundram Fasteners
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
In half a decade, Sundram Fasteners has managed to increase its earnings per share by 9.3% per year. This EPS growth is less than the average annual share price increase of 24%. This suggests that market players hold the company in high regard these days. That’s not necessarily surprising given five years of earnings growth.
You can see how EPS has changed over time in the image below (click on the graph to see the exact values).
It’s probably worth noting that the CEO is paid less than the median at companies of a similar size. It’s always worth keeping an eye on CEO compensation, but a more important question is whether the company will grow its profits over the years. This free The Sundram Fasteners Interactive Earnings, Revenue and Cash Flow Report is a great place to start if you want to do more research on the stock.
What about dividends?
It is important to consider the total shareholder return, as well as the stock price return, for a given stock. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. Note that for Sundram Fasteners the TSR over the last 5 years was 206%, which is better than the share price return mentioned above. This is largely the result of its dividend payments!
A different perspective
It is good to see that Sundram Fasteners has rewarded shareholders with a total shareholder return of 67% over the past twelve months. Of course, this includes the dividend. That’s better than the 25% annualized return over half a decade, which implies the company has been doing better recently. At best, this may hint at genuine trading momentum, implying that now could be a great time to dig deeper. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Consider the risks, for example. Every business has them, and we’ve spotted 1 warning sign for Sundram Fasteners you should know.
We’ll like Sundram Fasteners better if we see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.
Please note that the market returns quoted in this article reflect the average market-weighted returns of the stocks currently trading on the IN exchanges.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.