Hindustan Oil Exploration (NSE:HINDOILEXP) Shareholders Have Enjoyed An Impressive 214% Share Price Gain

When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Hindustan Oil Exploration Company Limited (NSE:HINDOILEXP) share price has soared 214% in the last half decade. Most would be very happy with that. Also pleasing for shareholders was the 30% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 23% in 90 days).

See our latest analysis for Hindustan Oil Exploration

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 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 half a decade, Hindustan Oil Exploration managed to grow its earnings per share at 77% a year. This EPS growth is higher than the 26% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company.

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

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

A Different Perspective

While the broader market gained around 20% in the last year, Hindustan Oil Exploration shareholders lost 9.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 26%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Hindustan Oil Exploration (including 1 which is concerning) .

Of course Hindustan Oil Exploration 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 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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