Did TeamLease Services' (NSE:TEAMLEASE) Share Price Deserve to Gain 30%?

By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at TeamLease Services Limited (NSE:TEAMLEASE), which is up 30%, over three years, soundly beating the market return of 5.5% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 5.7% in the last year.

View our latest analysis for TeamLease Services

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).

Over the last three years, TeamLease Services failed to grow earnings per share, which fell 28% (annualized).

So we doubt that the market is looking to EPS for its main judge of the company's value. Given this situation, it makes sense to look at other metrics too.

It may well be that TeamLease Services revenue growth rate of 15% over three years has convinced shareholders to believe in a brighter future. If the company is being managed for the long term good, today's shareholders might be right to hold on.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So it makes a lot of sense to check out what analysts think TeamLease Services will earn in the future (free profit forecasts).

A Different Perspective

TeamLease Services shareholders are up 5.7% for the year. While you don't go broke making a profit, this return was actually lower than the average market return of about 17%. At least the longer term returns (running at about 9% a year, are better. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. It's always interesting to track share price performance over the longer term. But to understand TeamLease Services better, we need to consider many other factors. Take risks, for example - TeamLease Services has 2 warning signs we think you should be aware of.

But note: TeamLease Services 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 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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