Update: Southern Petrochemical Industries (NSE:SPIC) Stock Gained 37% In The Last Five Years

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the Southern Petrochemical Industries Corporation Limited (NSE:SPIC) share price is up 37% in the last five years, slightly above the market return. Also positive is the 15% share price rise over the last year.

Check out our latest analysis for Southern Petrochemical Industries

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over half a decade, Southern Petrochemical Industries managed to grow its earnings per share at 51% a year. This EPS growth is higher than the 6.6% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company. The reasonably low P/E ratio of 6.35 also suggests market apprehension.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

This free interactive report on Southern Petrochemical Industries' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Southern Petrochemical Industries shareholders have received a total shareholder return of 15% over the last year. That gain is better than the annual TSR over five years, which is 6.6%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 3 warning signs for Southern Petrochemical Industries (1 is significant) that you should be aware of.

Of course Southern Petrochemical Industries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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