Wockhardt (NSE:WOCKPHARMA) pulls back 5.6% this week, but still delivers shareholders massive 351% return over 1 year

While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, the Wockhardt Limited (NSE:WOCKPHARMA) share price rocketed moonwards 351% in just one year. It's also good to see the share price up 18% over the last quarter. And shareholders have also done well over the long term, with an increase of 134% in the last three years.

Although Wockhardt has shed ₹9.3b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Wockhardt

Wockhardt wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Wockhardt grew its revenue by 8.3% last year. That's not great considering the company is losing money. So the 351% gain in just twelve months is completely unexpected. It's great to see that some have made big profits, but we aren't so sure that the increase is justified. This is an example of the huge profits some lucky shareholders occasionally make on growth stocks.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Wockhardt's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Wockhardt has rewarded shareholders with a total shareholder return of 351% in the last twelve months. That's better than the annualised return of 32% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Wockhardt (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

But note: Wockhardt may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.