Bombay Burmah Trading Corporation's (NSE:BBTC) five-year earnings growth trails the 21% YoY shareholder returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term The Bombay Burmah Trading Corporation, Limited (NSE:BBTC) shareholders would be well aware of this, since the stock is up 156% in five years. On top of that, the share price is up 44% in about a quarter.

The past week has proven to be lucrative for Bombay Burmah Trading Corporation investors, so let's see if fundamentals drove the company's five-year performance.

View our latest analysis for Bombay Burmah Trading Corporation

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the five years of share price growth, Bombay Burmah Trading Corporation 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.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Bombay Burmah Trading Corporation's key metrics by checking this interactive graph of Bombay Burmah Trading Corporation's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Bombay Burmah Trading Corporation has rewarded shareholders with a total shareholder return of 107% in the last twelve months. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 21% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Bombay Burmah Trading Corporation you should be aware of, and 1 of them shouldn't be ignored.

But note: Bombay Burmah Trading Corporation may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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