If You Had Bought Hester Biosciences (NSE:HESTERBIO) Shares Five Years Ago You'd Have Earned 212% Returns

When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Hester Biosciences Limited (NSE:HESTERBIO) share price has soared 212% in the last half decade. Most would be very happy with that. On top of that, the share price is up 43% in about a quarter.

See our latest analysis for Hester Biosciences

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Hester Biosciences managed to grow its earnings per share at 15% a year. This EPS growth is lower than the 26% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 55.44.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into Hester Biosciences' key metrics by checking this interactive graph of Hester Biosciences'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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Hester Biosciences the TSR over the last 5 years was 223%, 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

Hester Biosciences shareholders have received returns of 4.2% over twelve months (even including dividends), which isn't far from the general market return. It has to be noted that the recent return falls short of the 26% shareholders have gained each year, over half a decade. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Hester Biosciences a stock worth watching. It's always interesting to track share price performance over the longer term. But to understand Hester Biosciences better, we need to consider many other factors. Take risks, for example - Hester Biosciences has 3 warning signs we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

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This article by Simply Wall St is general in nature. 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.
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