Despite the downward trend in earnings at CL Educate (NSE:CLEDUCATE) the stock jumps 13%, bringing five-year gains to 298%

The most you can lose on any stock (assuming you don't use leverage) is 100% of 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%. Long term CL Educate Limited (NSE:CLEDUCATE) shareholders would be well aware of this, since the stock is up 292% in five years. In more good news, the share price has risen 13% in thirty days. But the price may well have benefitted from a buoyant market, since stocks have gained 5.7% in the last thirty days.

Since the stock has added ₹561m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for CL Educate

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 five years of share price growth, CL Educate moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Dive deeper into CL Educate's key metrics by checking this interactive graph of CL Educate's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered CL Educate's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. CL Educate's TSR of 298% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

CL Educate shareholders gained a total return of 36% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 32% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand CL Educate better, we need to consider many other factors. For instance, we've identified 2 warning signs for CL Educate that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com