Can You Imagine How Jubilant E.I.D.- Parry (India)'s (NSE:EIDPARRY) Shareholders Feel About Its 100% Share Price Gain?

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the E.I.D.- Parry (India) Limited (NSE:EIDPARRY) share price has soared 100% in the last half decade. Most would be very happy with that. It's also good to see the share price up 24% over the last quarter. But this could be related to the strong market, which is up 18% in the last three months.

See our latest analysis for E.I.D.- Parry (India)

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the five years of share price growth, E.I.D.- Parry (India) 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. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. Indeed, the E.I.D.- Parry (India) share price has gained 6.9% in three years. During the same period, EPS grew by 4.3% each year. This EPS growth is higher than the 2.2% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This unenthusiastic sentiment is reflected in the stock's reasonably modest P/E ratio of 9.10.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of E.I.D.- Parry (India)'s earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered E.I.D.- Parry (India)'s share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. E.I.D.- Parry (India)'s TSR of 109% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that E.I.D.- Parry (India) shareholders have received a total shareholder return of 51% over the last year. That's better than the annualised return of 16% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 1 warning sign for E.I.D.- Parry (India) that you should be aware of.

Of course E.I.D.- Parry (India) may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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