Deep Energy Resources' (NSE:DEEPENR) 77% CAGR outpaced the company's earnings growth over the same three-year period

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For instance the Deep Energy Resources Limited (NSE:DEEPENR) share price is 184% higher than it was three years ago. That sort of return is as solid as granite. Also pleasing for shareholders was the 33% gain in the last three months.

Since the stock has added ₹557m 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 Deep Energy Resources

We don't think that Deep Energy Resources' modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years Deep Energy Resources has grown its revenue at 109% annually. That's well above most pre-profit companies. Along the way, the share price gained 42% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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. It might be well worthwhile taking a look at our free report on Deep Energy Resources' earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered Deep Energy Resources' share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Deep Energy Resources' TSR of 455% over the last 3 years is better than the share price return.

A Different Perspective

It's good to see that Deep Energy Resources has rewarded shareholders with a total shareholder return of 22% in the last twelve months. Having said that, the five-year TSR of 28% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Deep Energy Resources better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Deep Energy Resources you should be aware of, and 1 of them can't be ignored.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.