Is Lakshmi Machine Works' (NSE:LAXMIMACH) Share Price Gain Of 149% Well Earned?

Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Lakshmi Machine Works Limited (NSE:LAXMIMACH) share price has soared 149% return in just a single year. Also pleasing for shareholders was the 33% gain in the last three months. Zooming out, the stock is actually down 12% in the last three years.

View our latest analysis for Lakshmi Machine Works

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Lakshmi Machine Works went from making a loss to reporting a profit, in the last year.

While it's good to see positive EPS of ₹19.12 this year, the loss wasn't too bad last year. But judging by the share price, the market is very pleased with the milestone of reaching profitability. Inflection points like this can be a great time to take a closer look at a company.

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

It might be well worthwhile taking a look at our free report on Lakshmi Machine Works' earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that Lakshmi Machine Works shareholders have received a total shareholder return of 150% over one year. And that does include the dividend. That's better than the annualised return of 14% 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 Lakshmi Machine Works better, we need to consider many other factors. For instance, we've identified 3 warning signs for Lakshmi Machine Works (1 doesn't sit too well with us) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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