Sunflag Iron and Steel's (NSE:SUNFLAG) five-year total shareholder returns outpace the underlying earnings growth

Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. For example, the Sunflag Iron and Steel Company Limited (NSE:SUNFLAG) share price is up a whopping 582% in the last half decade, a handsome return for long term holders. If that doesn't get you thinking about long term investing, we don't know what will. It's also good to see the share price up 33% over the last quarter. We love happy stories like this one. The company should be really proud of that performance!

Although Sunflag Iron and Steel has shed ₹4.9b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

See our latest analysis for Sunflag Iron and Steel

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 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.

Over half a decade, Sunflag Iron and Steel managed to grow its earnings per share at 20% a year. This EPS growth is lower than the 47% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of 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 Sunflag Iron and Steel's key metrics by checking this interactive graph of Sunflag Iron and Steel's earnings, revenue and cash flow.

A Different Perspective

Sunflag Iron and Steel shareholders have received returns of 13% over twelve months, which isn't far from the general market return. We should note here that the five-year TSR is more impressive, at 47% per year. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Sunflag Iron and Steel a stock worth watching. Before spending more time on Sunflag Iron and Steel it might be wise to click here to see if insiders have been buying or selling shares.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.