Pearl Global Industries (NSE:PGIL) stock outperforms underlying earnings growth over past five years

We believe that all investors should try to buy and hold high quality multi-year winners. And the highest quality companies can see their stock prices rise significantly. You do not believe it ? Then look at the Pearl Global Industries Limited (NSE: PGIL) share price. This is 303% higher than five years ago. It just shows the value creation some companies can achieve. Shareholders also appreciated the 39% gain over the past three months.

Last week proved to be lucrative for Pearl Global Industries investors, so let’s see if fundamentals drove the company’s five-year performance.

See our latest analysis for Pearl Global Industries

To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.

In half a decade, Pearl Global Industries has managed to grow its earnings per share by 13% per year. This EPS growth is slower than the share price growth of 32% per year, over the same period. This suggests that market players hold the company in high regard these days. And that’s hardly shocking given the track record of growth.

The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).

NSEI: PGIL Earnings per Share Growth April 5, 2022

Dive deeper into Pearl Global Industries key metrics by viewing this interactive chart of Pearl Global Industries earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there is a difference between Pearl Global Industries’ total shareholder return (TSR) and the change in its share price, which we have covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital increases offered to shareholders. Its dividend payout history means that Pearl Global Industries’ TSR of 325% over the past 5 years is better than the stock price return.

A different perspective

We are pleased to report that Pearl Global Industries shareholders received a one-year total shareholder return of 187%. As the one-year TSR is better than the five-year TSR (the latter standing at 34% per year), it seems that the stock’s performance has improved lately. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 3 warning signs with Pearl Global Industries (at least 2 that are potentially serious), and understanding them should be part of your investment process.

But note: Pearl Global Industries may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).

Please note that the market returns quoted in this article reflect the average market-weighted returns of the 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 only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.