The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For instance the Fine Organic Industries Limited (NSE:FINEORG) share price is 206% higher than it was three years ago. That sort of return is as solid as granite. On top of that, the share price is up 11% in about a quarter.
Since the stock has added ₹4.1b 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 Fine Organic Industries
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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During three years of share price growth, Fine Organic Industries achieved compound earnings per share growth of 5.6% 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 three years ago. That's not necessarily surprising considering the three-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 73.73.
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 Fine Organic Industries has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Fine Organic Industries will grow revenue in the future.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Fine Organic Industries the TSR over the last 3 years was 209%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
We're pleased to report that Fine Organic Industries rewarded shareholders with a total shareholder return of 79% over the last year. That includes the value of the dividend. That gain actually surpasses the 46% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting Fine Organic Industries on your watchlist. Before deciding if you like the current share price, check how Fine Organic Industries scores on these 3 valuation metrics.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN 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.
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