Optimism for Privi Speciality Chemicals (NSE:PRIVISCL) has grown this past week, despite five-year decline in earnings

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. For instance, the price of Privi Speciality Chemicals Limited (NSE:PRIVISCL) stock is up an impressive 166% over the last five years. In more good news, the share price has risen 25% in thirty days.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

See our latest analysis for Privi Speciality Chemicals

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last half decade, Privi Speciality Chemicals became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

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

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

What About The Total Shareholder Return (TSR)?

We've already covered Privi Speciality Chemicals' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Privi Speciality Chemicals' TSR of 294% over the last 5 years is better than the share price return.

A Different Perspective

Privi Speciality Chemicals shareholders are up 16% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 32% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Privi Speciality Chemicals has 2 warning signs we think you should be aware of.

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 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.