Investors Who Bought Kirloskar Ferrous Industries (NSE:KIRLFER) Shares A Year Ago Are Now Up 157%

Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Kirloskar Ferrous Industries Limited (NSE:KIRLFER) share price has soared 157% in the last year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 28% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 17% in 90 days). Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

See our latest analysis for Kirloskar Ferrous Industries

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Kirloskar Ferrous Industries was able to grow EPS by 175% in the last twelve months. This EPS growth is reasonably close to the 157% increase in the share price. So this implies that investor expectations of the company have remained pretty steady. It makes intuitive sense that the share price and EPS would grow at similar rates.

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

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

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Kirloskar Ferrous Industries the TSR over the last year was 165%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Kirloskar Ferrous Industries boasts a total shareholder return of 165% for the last year (that includes the dividends) . That's better than the more recent three month gain of 28%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for Kirloskar Ferrous Industries that you should be aware of.

We will like Kirloskar Ferrous Industries better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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