Did You Participate In Any Of DCM Shriram's (NSE:DCMSHRIRAM) Incredible 354% Return?

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held DCM Shriram Limited (NSE:DCMSHRIRAM) shares for the last five years, while they gained 311%. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 29% in about a quarter. But this could be related to the strong market, which is up 20% in the last three months.

Check out our latest analysis for DCM Shriram

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Over half a decade, DCM Shriram managed to grow its earnings per share at 27% a year. So the EPS growth rate is rather close to the annualized share price gain of 33% per year. This indicates that investor sentiment towards the company has not changed a great deal. Rather, the share price has approximately tracked EPS growth.

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

This free interactive report on DCM Shriram's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, DCM Shriram's TSR for the last 5 years was 354%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that DCM Shriram shareholders have received a total shareholder return of 35% over one year. And that does include the dividend. Having said that, the five-year TSR of 35% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand DCM Shriram better, we need to consider many other factors. For instance, we've identified 2 warning signs for DCM Shriram that you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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This article by Simply Wall St is general in nature. 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.
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