Parag Milk Foods' (NSE:PARAGMILK) one-year earnings growth trails the 76% YoY shareholder returns

Parag Milk Foods Limited (NSE:PARAGMILK) shareholders have seen the share price descend 10% over the month. But that doesn't change the fact that the returns over the last year have been pleasing. To wit, it had solidly beat the market, up 76%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for Parag Milk Foods

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Parag Milk Foods was able to grow EPS by 52% in the last twelve months. This EPS growth is significantly lower than the 76% increase in the share price. This indicates that the market is now more optimistic about the stock.

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

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

A Different Perspective

It's nice to see that Parag Milk Foods shareholders have received a total shareholder return of 76% over the last year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 4% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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 1 warning sign for Parag Milk Foods you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.