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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 VIP Industries Limited (NSE:VIPIND) share price. It's 448% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will.
View our latest analysis for VIP Industries
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During five years of share price growth, VIP Industries achieved compound earnings per share (EPS) growth of 22% per year. This EPS growth is lower than the 41% 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).
It is of course excellent to see how VIP Industries has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling VIP Industries stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, VIP Industries's TSR for the last 5 years was 487%, 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 VIP Industries shareholders have received a total shareholder return of 18% over one year. Of course, that includes the dividend. Having said that, the five-year TSR of 42% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Before deciding if you like the current share price, check how VIP Industries scores on these 3 valuation metrics.