The 8.6% return this week takes Religare Enterprises' (NSE:RELIGARE) shareholders five-year gains to 493%

For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. For example, the Religare Enterprises Limited (NSE:RELIGARE) share price is up a whopping 493% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. It's even up 8.6% in the last week.

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

View our latest analysis for Religare Enterprises

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Religare Enterprises 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.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Religare Enterprises' earnings, revenue and cash flow.

A Different Perspective

Religare Enterprises shareholders are up 23% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 43% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. 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 Religare Enterprises you should be aware of.

Religare Enterprises is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.