Deepak Fertilisers And Petrochemicals (NSE:DEEPAKFERT) jumps 9.7% this week, though earnings growth is still tracking behind five-year shareholder returns

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. Don't believe it? Then look at the Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT) share price. It's 870% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 22% in about a quarter. We love happy stories like this one. The company should be really proud of that performance!

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

Check out our latest analysis for Deepak Fertilisers And Petrochemicals

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. 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.

Over half a decade, Deepak Fertilisers And Petrochemicals managed to grow its earnings per share at 56% a year. This EPS growth is remarkably close to the 58% average annual increase in the share price. This indicates that investor sentiment towards the company has not changed a great deal. Rather, the share price has approximately tracked EPS growth.

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

Dive deeper into Deepak Fertilisers And Petrochemicals' key metrics by checking this interactive graph of Deepak Fertilisers And Petrochemicals's earnings, revenue and cash flow.

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Deepak Fertilisers And Petrochemicals, it has a TSR of 973% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Deepak Fertilisers And Petrochemicals has rewarded shareholders with a total shareholder return of 83% in the last twelve months. That's including the dividend. That's better than the annualised return of 61% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Deepak Fertilisers And Petrochemicals better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Deepak Fertilisers And Petrochemicals you should know about.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.