Investors Who Bought Steel Strips Wheels (NSE:SSWL) Shares Five Years Ago Are Now Up 121%

When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Steel Strips Wheels Limited (NSE:SSWL) stock is up an impressive 121% over the last five years. Also pleasing for shareholders was the 41% gain in the last three months.

See our latest analysis for Steel Strips Wheels

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Steel Strips Wheels actually saw its EPS drop 21% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 5.9% per year is probably viewed as evidence that Steel Strips Wheels is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What about the Total Shareholder Return (TSR)?

We've already covered Steel Strips Wheels' share price action, but we should also mention its 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. Dividends have been really beneficial for Steel Strips Wheels shareholders, and that cash payout contributed to why its TSR of 124%, over the last 5 years, is better than the share price return.

A Different Perspective

Steel Strips Wheels shareholders are up 24% for the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 18% per year over five year. It is possible that returns will improve along with the business fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Steel Strips Wheels has 3 warning signs (and 2 which can't be ignored) we think you should know about.

Of course Steel Strips Wheels 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 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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