Indus Towers' (NSE:INDUSTOWER) one-year earnings growth trails the solid shareholder returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Indus Towers Limited (NSE:INDUSTOWER) share price has soared 152% in the last 1 year. Most would be very happy with that, especially in just one year! On top of that, the share price is up 26% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 12% in 90 days). It is also impressive that the stock is up 103% over three years, adding to the sense that it is a real winner.

Since the stock has added ₹65b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Indus Towers

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Indus Towers was able to grow EPS by 127% in the last twelve months. We note that the earnings per share growth isn't far from the share price growth (of 152%). This makes us think the market hasn't really changed its sentiment around the company, in the last year. We don't think its coincidental that the share price is growing at a similar rate to the earnings per share.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Indus Towers' earnings, revenue and cash flow.

A Different Perspective

It's nice to see that Indus Towers shareholders have received a total shareholder return of 152% over the last year. That gain is better than the annual TSR over five years, which is 17%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before forming an opinion on Indus Towers you might want to consider these 3 valuation metrics.

But note: Indus Towers 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.