Kothari Products (NSE:KOTHARIPRO) delivers shareholders strong 28% CAGR over 5 years, surging 20% in the last week alone

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 example, the Kothari Products Limited (NSE:KOTHARIPRO) share price has soared 239% in the last half decade. Most would be very happy with that. It's also up 33% in about a month.

The past week has proven to be lucrative for Kothari Products investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Kothari Products

Kothari Products wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last half decade Kothari Products' revenue has actually been trending down at about 31% per year. Given that scenario, we wouldn't have expected the share price to rise 28% per year, but that's what it did. It's a good reminder that expectations about the future, not the past history, always impact share prices. Still, this situation makes us a little wary of the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Kothari Products' financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Kothari Products shareholders have received a total shareholder return of 65% over the last year. That's better than the annualised return of 28% 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 Kothari Products better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Kothari Products .

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.