Can You Imagine How NSE's (EPA:ALNSE) Shareholders Feel About The 42% Share Price Increase?

One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. For example, the NSE S.A. (EPA:ALNSE) share price is up 42% in the last three years, clearly besting the market return of around 6.8% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 24% in the last year , including dividends .

Check out our latest analysis for NSE

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

NSE was able to grow its EPS at 110% per year over three years, sending the share price higher. This EPS growth is higher than the 13% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.12.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how NSE has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What about the Total Shareholder Return (TSR)?

We've already covered NSE's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. NSE's TSR of 45% for the 3 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that NSE has rewarded shareholders with a total shareholder return of 24% in the last twelve months. That's better than the annualised return of 6% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand NSE better, we need to consider many other factors. Take risks, for example - NSE has 3 warning signs (and 1 which can't be ignored) we think you should know about.

Of course NSE may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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