India Motor Parts and Accessories (NSE:IMPAL) Shareholders Booked A 17% Gain In The Last Five Years

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 India Motor Parts and Accessories Limited (NSE:IMPAL) has fallen short of that second goal, with a share price rise of 17% over five years, which is below the market return. Zooming in, the stock is actually down 1.0% in the last year.

Check out our latest analysis for India Motor Parts and Accessories

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.

Over half a decade, India Motor Parts and Accessories managed to grow its earnings per share at 9.9% a year. The EPS growth is more impressive than the yearly share price gain of 3.1% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of India Motor Parts and Accessories, it has a TSR of 26% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

India Motor Parts and Accessories shareholders are up 1.9% for the year (even including dividends). But that was short of the market average. On the bright side, the longer term returns (running at about 4.8% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. 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 India Motor Parts and Accessories , and understanding them should be part of your investment process.

Of course India Motor Parts and Accessories 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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