MMP Industries' (NSE:MMP) one-year earnings growth trails the strong shareholder returns

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the MMP Industries Limited (NSE:MMP) share price has soared 129% return in just a single year. It's also good to see the share price up 38% over the last quarter. Looking back further, the stock price is 60% higher than it was three years ago.

Since the stock has added ₹809m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for MMP 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. 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.

During the last year MMP Industries grew its earnings per share (EPS) by 87%. The share price gain of 129% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

We're pleased to report that MMP Industries rewarded shareholders with a total shareholder return of 131% over the last year. And yes, that does include the dividend. That's better than the annualized TSR of 17% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. It's always interesting to track share price performance over the longer term. But to understand MMP Industries better, we need to consider many other factors. For example, we've discovered 3 warning signs for MMP Industries that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.