The total return for ZF Commercial Vehicle Control Systems India (NSE:ZFCVINDIA) investors has risen faster than earnings growth over the last five years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. For example, the ZF Commercial Vehicle Control Systems India Limited (NSE:ZFCVINDIA) share price has soared 105% in the last half decade. Most would be very happy with that. Unfortunately, though, the stock has dropped 3.6% over a week.

In light of the stock dropping 3.6% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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, ZF Commercial Vehicle Control Systems India managed to grow its earnings per share at 46% a year. The EPS growth is more impressive than the yearly share price gain of 15% over the same period. So one could conclude that the broader market has become more cautious towards the stock. Having said that, the market is still optimistic, given the P/E ratio of 53.72.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We know that ZF Commercial Vehicle Control Systems India has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at ZF Commercial Vehicle Control Systems India's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that ZF Commercial Vehicle Control Systems India shareholders are down 16% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 4.4%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 16% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before forming an opinion on ZF Commercial Vehicle Control Systems India you might want to consider these 3 valuation metrics.

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 Indian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.