Bombay Super Hybrid Seeds' (NSE:BSHSL) three-year earnings growth trails the 68% YoY shareholder returns

By
Simply Wall St
Published
March 17, 2022
NSEI:BSHSL
Source: Shutterstock

Investing can be hard but the potential fo an individual stock to pay off big time inspires us. Not every pick can be a winner, but when you pick the right stock, you can win big. One bright shining star stock has been Bombay Super Hybrid Seeds Limited (NSE:BSHSL), which is 374% higher than three years ago. On top of that, the share price is up 25% in about a quarter.

Since it's been a strong week for Bombay Super Hybrid Seeds shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Bombay Super Hybrid Seeds

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. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Bombay Super Hybrid Seeds was able to grow its EPS at 74% per year over three years, sending the share price higher. We note that the 68% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This observation indicates that the market's attitude to the business hasn't changed all that much. Quite to the contrary, the share price has arguably reflected the EPS growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth
NSEI:BSHSL Earnings Per Share Growth March 17th 2022

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's nice to see that Bombay Super Hybrid Seeds shareholders have gained 184% (in total) over the last year. That gain actually surpasses the 68% TSR it generated (per year) over three years. The improving returns to shareholders suggests the stock is becoming more popular with time. 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. Even so, be aware that Bombay Super Hybrid Seeds is showing 1 warning sign in our investment analysis , you should know about...

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 IN exchanges.

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