U.S. Markets open in 7 hrs 37 mins

Did The Underlying Business Drive Navin Fluorine International's (NSE:NAVINFLUOR) Lovely 551% Share Price Gain?

Simply Wall St

Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Navin Fluorine International Limited (NSE:NAVINFLUOR) shares for the last five years, while they gained 551%. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 30% over the last quarter.

We love happy stories like this one. The company should be really proud of that performance!

Check out our latest analysis for Navin Fluorine International

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 five years of share price growth, Navin Fluorine International achieved compound earnings per share (EPS) growth of 18% per year. This EPS growth is lower than the 45% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

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

NSEI:NAVINFLUOR Past and Future Earnings, October 21st 2019

It might be well worthwhile taking a look at our free report on Navin Fluorine International's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Navin Fluorine International's TSR for the last 5 years was 599%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Navin Fluorine International shareholders have received a total shareholder return of 20% over one year. That's including the dividend. Having said that, the five-year TSR of 48% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

But note: Navin Fluorine International 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 IN exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.