InterGlobe Aviation's (NSE:INDIGO) five-year total shareholder returns outpace the underlying earnings growth

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. Long term InterGlobe Aviation Limited (NSE:INDIGO) shareholders would be well aware of this, since the stock is up 163% in five years. On the other hand, the stock price has retraced 6.8% in the last week. But this could be related to the soft market, with stocks selling off around 3.6% in the last week.

Since the long term performance has been good but there's been a recent pullback of 6.8%, let's check if the fundamentals match the share price.

View our latest analysis for InterGlobe Aviation

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

During the last half decade, InterGlobe Aviation became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that InterGlobe Aviation has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at InterGlobe Aviation's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that InterGlobe Aviation shareholders have received a total shareholder return of 82% over the last year. That's better than the annualised return of 21% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that InterGlobe Aviation is showing 1 warning sign in our investment analysis , you should know about...

But note: InterGlobe Aviation 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.