Cholamandalam Financial Holdings' (NSE:CHOLAHLDNG) five-year earnings growth trails the 30% YoY shareholder returns

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Cholamandalam Financial Holdings Limited (NSE:CHOLAHLDNG) stock is up an impressive 266% over the last five years. We note the stock price is up 3.9% in the last seven days.

Since it's been a strong week for Cholamandalam Financial Holdings shareholders, let's have a look at trend of the longer term fundamentals.

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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. 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).

During five years of share price growth, Cholamandalam Financial Holdings achieved compound earnings per share (EPS) growth of 24% per year. This EPS growth is lower than the 30% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Cholamandalam Financial Holdings' earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Cholamandalam Financial Holdings shareholders have received a total shareholder return of 26% over the last year. That's including the dividend. However, the TSR over five years, coming in at 30% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Cholamandalam Financial Holdings better, we need to consider many other factors. Even so, be aware that Cholamandalam Financial Holdings is showing 1 warning sign in our investment analysis , you should know about...

We will like Cholamandalam Financial Holdings better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.