The Madras Fertilizers (NSE:MADRASFERT) Share Price Is Up 87% And Shareholders Are Holding On

Stock pickers are generally looking for stocks that will outperform the broader market. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Madras Fertilizers Limited (NSE:MADRASFERT) shareholders have enjoyed a 87% share price rise over the last half decade, well in excess of the market return of around 72% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 23%.

View our latest analysis for Madras Fertilizers

Madras Fertilizers isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

For the last half decade, Madras Fertilizers can boast revenue growth at a rate of 3.3% per year. That's not a very high growth rate considering the bottom line. The modest growth is probably broadly reflected in the share price, which is up 13%, per year over 5 years. The business could be one worth watching but we generally prefer faster revenue growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Madras Fertilizers stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Madras Fertilizers' TSR for the year was broadly in line with the market average, at 23%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 13%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Madras Fertilizers , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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