In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
We think all investors should try to buy and hold high quality multi-year winners. While not every stock performs well, when investors win, they can win big. To wit, the Indraprastha Gas Limited (NSE:IGL) share price has soared 406% over five years. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 16% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.
View our latest analysis for Indraprastha Gas
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Over half a decade, Indraprastha Gas managed to grow its earnings per share at 19% a year. This EPS growth is lower than the 38% 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. And that's hardly shocking given the track record of growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Indraprastha Gas the TSR over the last 5 years was 432%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that Indraprastha Gas shareholders have received a total shareholder return of 29% over one year. Of course, that includes the dividend. However, that falls short of the 40% TSR per annum it has made for shareholders, each year, over five years. Before forming an opinion on Indraprastha Gas you might want to consider these 3 valuation metrics.