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Godawari Power & Ispat’s (NSE:GPIL) three-year earnings growth trails the incredible shareholder returns


Investing can be hard but the potential fo an individual stock to pay off big time inspires us. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. One such superstar is Godawari Power & Ispat Limited (NSE:GPIL), which saw its share price soar 652% in three years. And in the last month, the share price has gained 20%. This could be related to the recent financial results that were recently released – you could check the most recent data by reading our company report. Anyone who held for that rewarding ride would probably be keen to talk about it.

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

Our analysis indicates that GPIL is potentially undervalued!

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

During three years of share price growth, Godawari Power & Ispat achieved compound earnings per share growth of 78% per year. We don’t think it is entirely coincidental that the EPS growth is reasonably close to the 96% average annual increase in the share price. 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).

NSEI:GPIL Earnings Per Share Growth November 24th 2022

Dive deeper into Godawari Power & Ispat’s key metrics by checking this interactive graph of Godawari Power & Ispat’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 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. We note that for Godawari Power & Ispat the TSR over the last 3 years was 690%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It’s good to see that Godawari Power & Ispat has rewarded shareholders with a total shareholder return of 20% in the last twelve months. That’s including the dividend. However, the TSR over five years, coming in at 51% per year, is even more impressive. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Godawari Power & Ispat (of which 1 can’t be ignored!) you should know about.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Godawari Power & Ispat is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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