Syngene International (NSE:SYNGENE) sheds 3.2% this week, as yearly returns fall more in line with earnings growth

It hasn't been the best quarter for Syngene International Limited (NSE:SYNGENE) shareholders, since the share price has fallen 20% in that time. But that doesn't change the fact that shareholders have received really good returns over the last five years. We think most investors would be happy with the 147% return, over that period. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Ultimately business performance will determine whether the stock price continues the positive long term trend.

Although Syngene International has shed ₹9.2b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

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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.

Over half a decade, Syngene International managed to grow its earnings per share at 4.8% a year. This EPS growth is slower than the share price growth of 20% per year, over the same period. 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. This optimism is visible in its fairly high P/E ratio of 55.62.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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

A Different Perspective

Syngene International shareholders are down 4.7% over twelve months (even including dividends), which isn't far from the market return of -5.2%. Longer term investors wouldn't be so upset, since they would have made 20%, each year, over five years. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. If you would like to research Syngene International in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

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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.