Garware Technical Fibres (NSE:GARFIBRES) jumps 8.2% this week, though earnings growth is still tracking behind five-year shareholder returns

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. For instance, the price of Garware Technical Fibres Limited (NSE:GARFIBRES) stock is up an impressive 264% over the last five years. Better yet, the share price has risen 8.2% in the last week.

Since it's been a strong week for Garware Technical Fibres shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Garware Technical Fibres

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over half a decade, Garware Technical Fibres managed to grow its earnings per share at 14% a year. This EPS growth is slower than the share price growth of 29% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Garware Technical Fibres has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Garware Technical Fibres will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Garware Technical Fibres, it has a TSR of 271% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Garware Technical Fibres shareholders are up 24% for the year (even including dividends). But that was short of the market average. On the bright side, the longer term returns (running at about 30% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. Before forming an opinion on Garware Technical Fibres you might want to consider these 3 valuation metrics.

Of course Garware Technical Fibres may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.