TVS Holdings (NSE:TVSHLTD) stock performs better than its underlying earnings growth over last five years

Simply Wall St · 09/01 02:16

Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. For example, the TVS Holdings Limited (NSE:TVSHLTD) share price is up a whopping 635% in the last half decade, a handsome return for long term holders. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 21% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 12% in 90 days). We love happy stories like this one. The company should be really proud of that performance!

Since it's been a strong week for TVS Holdings shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for TVS Holdings

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over half a decade, TVS Holdings managed to grow its earnings per share at 14% a year. This EPS growth is lower than the 49% 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. That's not necessarily surprising considering the five-year track record of earnings growth.

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

earnings-per-share-growth
NSEI:TVSHLTD Earnings Per Share Growth September 1st 2024

Dive deeper into TVS Holdings' key metrics by checking this interactive graph of TVS Holdings'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). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, TVS Holdings' TSR for the last 5 years was 938%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that TVS Holdings shareholders have received a total shareholder return of 168% over one year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 60%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand TVS Holdings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with TVS Holdings (including 1 which makes us a bit uncomfortable) .

If you are like me, then you will not want to miss this free list of undervalued small caps 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 Indian exchanges.