If You Had Bought Puravankara (NSE:PURVA) Stock Five Years Ago, You Could Pocket A 58% Gain Today

The main point of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. But Puravankara Limited (NSE:PURVA) has fallen short of that second goal, with a share price rise of 58% over five years, which is below the market return. Over the last twelve months the stock price has risen a very respectable 10%.

View our latest analysis for Puravankara

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Puravankara's earnings per share are down 4.4% per year, despite strong share price performance over five years.

By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 7.4% per year is probably viewed as evidence that Puravankara is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Puravankara's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Puravankara's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Puravankara's TSR of 71% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

Puravankara shareholders are up 10% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 11% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Puravankara better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Puravankara (of which 2 make us uncomfortable!) you should know about.

We will like Puravankara better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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