Shareholders Of Thirumalai Chemicals (NSE:TIRUMALCHM) Must Be Happy With Their 256% Total Return

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Thirumalai Chemicals Limited (NSE:TIRUMALCHM) stock is up an impressive 218% over the last five years. It's also good to see the share price up 51% over the last quarter.

View our latest analysis for Thirumalai Chemicals

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

Over half a decade, Thirumalai Chemicals managed to grow its earnings per share at 13% 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.

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

Dive deeper into Thirumalai Chemicals' key metrics by checking this interactive graph of Thirumalai Chemicals's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Thirumalai Chemicals' share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Thirumalai Chemicals' TSR of 256% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

Investors in Thirumalai Chemicals had a tough year, with a total loss of 4.0%, against a market gain of about 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 29%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Case in point: We've spotted 2 warning signs for Thirumalai Chemicals you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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