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It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For instance the Astral Poly Technik Limited (NSE:ASTRAL) share price is 199% higher than it was three years ago. How nice for those who held the stock! Meanwhile the share price is 1.7% higher than it was a week ago.
See our latest analysis for Astral Poly Technik
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.
Astral Poly Technik was able to grow its EPS at 36% per year over three years, sending the share price higher. We note that the 44% yearly (average) share price gain isn’t too far from the EPS growth rate. Coincidence? Probably not. That suggests that the market sentiment around the company hasn’t changed much over that time. Rather, the share price has approximately tracked EPS 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 Astral Poly Technik has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Astral Poly Technik’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Pleasingly, Astral Poly Technik’s total shareholder return last year was 31%. That’s including the dividend. But the three year TSR of 44% per year is even better. 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.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can 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.
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.