In This Article:
For many, the main point of investing in the stock market is to achieve spectacular returns. And we've seen some truly amazing gains over the years. Don't believe it? Then look at the Gujarat Ambuja Exports Limited (NSE:GAEL) share price. It's 563% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve.
It really delights us to see such great share price performance for investors.
Check out our latest analysis for Gujarat Ambuja Exports
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over half a decade, Gujarat Ambuja Exports managed to grow its earnings per share at 22% a year. This EPS growth is lower than the 46% 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.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Gujarat Ambuja Exports has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Gujarat Ambuja Exports's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Gujarat Ambuja Exports's TSR for the last 5 years was 593%, 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 regret to report that Gujarat Ambuja Exports shareholders are down 23% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 0.6%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 47%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before forming an opinion on Gujarat Ambuja Exports you might want to consider these 3 valuation metrics.