Crompton Greaves Consumer Electricals’ (NSE:CROMPTON) 7.8% CAGR outpaced the company’s earnings growth over the same five-year period

While Crompton Greaves Consumer Electricals Limited (NSE:CROMPTON) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 10% in the last quarter. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 40%, less than the market return of 56%. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 19% drop, in the last year.

After a strong gain in the past week, it’s worth seeing if longer term returns have been driven by improving fundamentals.

See our latest analysis for Crompton Greaves Consumer Electricals

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Crompton Greaves Consumer Electricals achieved compound earnings per share (EPS) growth of 14% per year. The EPS growth is more impressive than the yearly share price gain of 7% over the same period. So it seems the market isn’t so enthusiastic about the stock these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Crompton Greaves Consumer Electricals’ key metrics by checking this interactive graph of Crompton Greaves Consumer Electricals’s earnings, revenue and cash flow.

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, Crompton Greaves Consumer Electricals’ TSR for the last 5 years was 45%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market gained around 6.1% in the last year, Crompton Greaves Consumer Electricals shareholders lost 19% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn’t be so upset, since they would have made 8%, 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. It’s always interesting to track share price performance over the longer term. But to understand Crompton Greaves Consumer Electricals better, we need to consider many other factors. For instance, we’ve identified 1 warning sign for Crompton Greaves Consumer Electricals that you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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.