Earnings growth topped the impressive 247% return delivered to shareholders of Sharda Motor Industries (NSE: SHARDAMOTR) over the past year

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Unless you borrow money to invest, the potential losses are limited. On the flip side, if you find a high quality business to buy (at the right price), you can more than double your money! For example, the Sharda Motor Industries Limited (NSE: SHARDAMOTR) The stock price has climbed 246% in the past year. Most would be very happy, especially in just a year! Better yet, the stock price rose 17% last week. And shareholders have performed well over the long term as well, with an increase of 126% over the past three years.

The past week has turned out to be lucrative for investors in Sharda Motor Industries, so let’s see if fundamentals have driven the company’s year-over-year performance.

Check out our latest review for Sharda Motor Industries

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly responsive dynamic systems and investors are not always rational. An imperfect but straightforward way to consider how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

Sharda Motor Industries has been able to increase its EPS by 325% over the past twelve months. This EPS growth is significantly higher than the 246% increase in the share price. As a result, it looks like the market isn’t as excited about Sharda Motor Industries as it used to be. It could be an opportunity.

The image below shows how EPS has tracked over time (if you click on the image you can see more detail).

NSEI: SHARDAMOTR Growth in earnings per share November 11, 2021

It’s probably worth noting that CEOs are paid less than the median in companies of similar size. But while CEO compensation is still worth checking out, the really important question is whether the company can increase profits in the future. Dive deeper into profits by checking out this interactive Sharda Motor Industries Earnings, Revenue and Cash Flow chart.

A different perspective

It is nice to see that the shareholders of Sharda Motor Industries have received a total shareholder return of 247% over the past year. Of course, this includes the dividend. This is better than the 31% annualized return over half a decade, which implies that the company has been doing better recently. At the best of times, this can portend real business momentum, meaning that now may be a good time to dig deep. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Example: we have spotted 2 warning signs for Sharda Motor Industries you need to be aware of it, and one of them is of concern.

For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the IN exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

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