Manaksia Steels' (NSE:MANAKSTEEL) earnings growth rate lags the 47% CAGR delivered to shareholders

Manaksia Steels Limited (NSE:MANAKSTEEL) shareholders might be concerned after seeing the share price drop 22% in the last month. But in three years the returns have been great. In three years the stock price has launched 215% higher: a great result. To some, the recent share price pullback wouldn't be surprising after such a good run. Only time will tell if there is still too much optimism currently reflected in the share price.

Although Manaksia Steels has shed ₹560m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Manaksia Steels

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Manaksia Steels was able to grow its EPS at 5.6% per year over three years, sending the share price higher. In comparison, the 47% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. That's not necessarily surprising considering the three-year track record of earnings growth.

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

Dive deeper into Manaksia Steels' key metrics by checking this interactive graph of Manaksia Steels's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Manaksia Steels has rewarded shareholders with a total shareholder return of 67% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 25% per year), it would seem that the stock's performance has improved in recent times. 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 Manaksia Steels better, we need to consider many other factors. Even so, be aware that Manaksia Steels is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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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.