Kalpataru Projects (KPIL) Stock: Analyzing 5-Year Returns

Kalpataru Projects International Limited ( ) shareholders might be concerned after seeing the share price drop 13% in the last quarter. But that scarcely detracts from the really solid long term returns generated by the company over five years. We think most investors would be happy with the 247% return, over that period. To some, the recent pullback wouldn't be surprising after such a fast rise. The more important question is whether the stock is too cheap or too expensive today. Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business. In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During five years of share price growth, Kalpataru Projects International achieved compound earnings per share (EPS) growth of 16% per year. This EPS growth is lower than the 28% 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 image below shows how EPS has tracked over time (if you click on the image you can see greater detail). We know that Kalpataru Projects International has improved its bottom line lately, but is it going to grow revenue? You could check out this free . What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Kalpataru Projects International the TSR over the last 5 years was 273%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return. A Different Perspective Investors in Kalpataru Projects International had a tough year, with a total loss of 1.4% (including dividends), against a market gain of about 4.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 30% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Kalpataru Projects International better, we need to consider many other factors. Take risks, for example - Kalpataru Projects International has we think you should know about. For those who like to find winning investments this free Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian exchanges.