The total return for Black Box (NSE:BBOX) investors has risen faster than earnings growth over the last five years

We think all investors should try to buy and hold high quality multi-year winners. And we've seen some truly amazing gains over the years. For example, the Black Box Limited (NSE:BBOX) share price is up a whopping 326% in the last half decade, a handsome return for long term holders. If that doesn't get you thinking about long term investing, we don't know what will. But it's down 6.7% in the last week.

While the stock has fallen 6.7% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

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To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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, Black Box managed to grow its earnings per share at 43% a year. The EPS growth is more impressive than the yearly share price gain of 34% over the same period. So it seems the market isn't so enthusiastic about the stock these days.

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

We know that Black Box has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Black Box's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Black Box shareholders have received a total shareholder return of 6.3% over the last year. And that does include the dividend. However, the TSR over five years, coming in at 34% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Black Box better, we need to consider many other factors. For instance, we've identified 2 warning signs for Black Box (1 is a bit concerning) that you should be aware of.

We will like Black Box better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 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.