Galaxy Surfactant (NSE:GALAXYSURF)’s 5-Year Total Shareholder Return Outperforms Underlying Earnings Growth

If you buy a stock and hold it for years, you would expect it to make a profit. But more than that, you want it to rise above the market average. Unfortunately for shareholders, GALAXY SURFACTANT LIMITED. (NSE:GALAXYSURF)’s share price has risen 88% over the past five years, which is below the market return. Over the past 12 months, the stock price has increased by 8.8%.

The past week has hurt the company’s five-year earnings, but let’s take a look at recent trends in the underlying business to see if the earnings are in line.

See our latest analysis for Galaxy Surfactants.

Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that overreact and that investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can learn how investor attitudes to a company have changed over time.

Galaxy Surfactant has managed to grow its earnings per share at 9.1% per year over five years. This EPS growth is slower than the 13% annual growth in the share price over the same period. So it’s fair to think the market has a higher valuation for this business than it did five years ago. And this is not surprising given its track record of growth.

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

Dive deeper into Galaxy Surfactants’ key metrics by checking this interactive graph of Galaxy Surfactants’ earnings, revenue and cash flow.

What will happen to the dividend?

As well as measuring share price return, investors should also consider 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 increases and spin-offs. So for companies that pay a generous dividend, the TSR is often much higher than the share price return. We note that Galaxy Surfactants’ TSR over the last five years was 96%, which is better than the share price return mentioned above. Therefore, the dividend paid by the company is total Shareholder returns.

different perspective

Galaxy Surfactant shareholders are up 9.6% for the year (even including dividends). However, this was below the market average. On the bright side, the long-term returns (which have hovered around 14% per annum over five years) are looking better. Perhaps the stock is taking a breather while the company executes its growth strategy. 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. For example, we identified 1 Warning Sign for Galaxy Surfactant What you need to know.

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.