Can You Imagine How Elated ADF Foods's (NSE:ADFFOODS) Shareholders Feel About Its 355% Share Price Gain?

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Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the ADF Foods Limited (NSE:ADFFOODS) share price. It's 355% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 15% in about a quarter.

Check out our latest analysis for ADF Foods

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.

Over half a decade, ADF Foods managed to grow its earnings per share at 37% a year. That makes the EPS growth particularly close to the yearly share price growth of 35%. That suggests that the market sentiment around the company hasn't changed much over that time. Rather, the share price has approximately tracked EPS growth.

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

It is of course excellent to see how ADF Foods has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at ADF Foods's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between ADF Foods's total shareholder return (TSR) and its share price return. 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. Dividends have been really beneficial for ADF Foods shareholders, and that cash payout contributed to why its TSR of 379%, over the last 5 years, is better than the share price return.

A Different Perspective

It's nice to see that ADF Foods shareholders have received a total shareholder return of 11% over the last year. However, that falls short of the 37% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Before spending more time on ADF Foods it might be wise to click here to see if insiders have been buying or selling shares.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.