J.K. Cement's (NSE:JKCEMENT) investors will be pleased with their massive 391% return over the last five years

Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. For example, the J.K. Cement Limited (NSE:JKCEMENT) share price is up a whopping 381% 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. Meanwhile the share price is 1.9% higher than it was a week ago.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

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

During five years of share price growth, J.K. Cement achieved compound earnings per share (EPS) growth of 8.8% per year. This EPS growth is slower than the share price growth of 37% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 55.79.

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

This free interactive report on J.K. Cement'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 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. In the case of J.K. Cement, it has a TSR of 391% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that J.K. Cement has rewarded shareholders with a total shareholder return of 33% in the last twelve months. That's including the dividend. Having said that, the five-year TSR of 37% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand J.K. Cement better, we need to consider many other factors. Take risks, for example - J.K. Cement has 3 warning signs we think you should be aware of.

But note: J.K. Cement may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.