Did Vidhi Specialty Food Ingredients' (NSE:VIDHIING) Share Price Deserve to Gain 94%?

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Vidhi Specialty Food Ingredients Limited (NSE:VIDHIING) share price is up 94% in the last year, clearly besting the market return of around 16% (not including dividends). So that should have shareholders smiling. And shareholders have also done well over the long term, with an increase of 44% in the last three years.

See our latest analysis for Vidhi Specialty Food Ingredients

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

Vidhi Specialty Food Ingredients was able to grow EPS by 5.6% in the last twelve months. The share price gain of 94% 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.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Vidhi Specialty Food Ingredients' key metrics by checking this interactive graph of Vidhi Specialty Food Ingredients's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Vidhi Specialty Food Ingredients' TSR for the last year was 96%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Vidhi Specialty Food Ingredients rewarded shareholders with a total shareholder return of 96% over the last year. That's including the dividend. That's better than the annualized TSR of 14% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting Vidhi Specialty Food Ingredients on your watchlist. 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. Take risks, for example - Vidhi Specialty Food Ingredients has 2 warning signs we think you should be aware of.

Of course Vidhi Specialty Food Ingredients 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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