Andhra Sugars' (NSE:ANDHRSUGAR) five-year earnings growth trails the 27% YoY shareholder returns

By
Simply Wall St
Published
March 15, 2022
NSEI:ANDHRSUGAR
Source: Shutterstock

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%. For instance, the price of The Andhra Sugars Limited (NSE:ANDHRSUGAR) stock is up an impressive 171% over the last five years. It's also good to see the share price up 35% over the last quarter.

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

See our latest analysis for Andhra Sugars

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 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.

During five years of share price growth, Andhra Sugars achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is lower than the 22% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.

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

earnings-per-share-growth
NSEI:ANDHRSUGAR Earnings Per Share Growth March 15th 2022

It might be well worthwhile taking a look at our free report on Andhra Sugars' earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Andhra Sugars the TSR over the last 5 years was 232%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Andhra Sugars has rewarded shareholders with a total shareholder return of 158% in the last twelve months. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 27% 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. It's always interesting to track share price performance over the longer term. But to understand Andhra Sugars better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Andhra Sugars .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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