The 3.7% return this week takes Olectra Greentech's (NSE:OLECTRA) shareholders five-year gains to 751%

We think all investors should try to buy and hold high quality multi-year winners. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held Olectra Greentech Limited (NSE:OLECTRA) shares for the last five years, while they gained 750%. And this is just one example of the epic gains achieved by some long term investors. In the last week the share price is up 3.7%. Anyone who held for that rewarding ride would probably be keen to talk about it.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Olectra Greentech

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 the last half decade, Olectra Greentech became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Olectra Greentech share price is up 305% in the last three years. Meanwhile, EPS is up 79% per year. This EPS growth is higher than the 59% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. Of course, with a P/E ratio of 160.33, the market remains optimistic.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Olectra Greentech has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Olectra Greentech stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Olectra Greentech shareholders are up 37% for the year (even including dividends). But that was short of the market average. If we look back over five years, the returns are even better, coming in at 53% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

But note: Olectra Greentech may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.