Qatar Gas Transport Company Limited (Nakilat) (QPSC)'s (DSM:QGTS) five-year earnings growth trails the 20% YoY shareholder returns

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. Long term Qatar Gas Transport Company Limited (Nakilat) (QPSC) (DSM:QGTS) shareholders would be well aware of this, since the stock is up 105% in five years. It's also good to see the share price up 21% over the last quarter.

Since it's been a strong week for Qatar Gas Transport Company Limited (Nakilat) (QPSC) shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Qatar Gas Transport Company Limited (Nakilat) (QPSC)

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 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 five years of share price growth, Qatar Gas Transport Company Limited (Nakilat) (QPSC) achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is slower than the share price growth of 15% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Qatar Gas Transport Company Limited (Nakilat) (QPSC) has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Qatar Gas Transport Company Limited (Nakilat) (QPSC) will grow revenue in the future.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for Qatar Gas Transport Company Limited (Nakilat) (QPSC) the TSR over the last 5 years was 147%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Qatar Gas Transport Company Limited (Nakilat) (QPSC) shareholders have received a total shareholder return of 12% over the last year. Of course, that includes the dividend. Having said that, the five-year TSR of 20% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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. Case in point: We've spotted 2 warning signs for Qatar Gas Transport Company Limited (Nakilat) (QPSC) you should be aware of, and 1 of them doesn't sit too well with us.

We will like Qatar Gas Transport Company Limited (Nakilat) (QPSC) 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 Qatari 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com