Investing in Godrej Consumer Products (NSE:GODREJCP) five years ago would have given you a 37% return | So Good News
When you buy and store an item for a long time, you definitely want it to come back in good condition. But more than that, you probably want to see it rise above the market rate. Unfortunately for shareholders, where a Company Profile Godrej Consumer Products Limited (NSE:GODREJCP) share price has increased by 33% in the last five years, which is less than the market return. Last year has been a disappointment, with a stock price of 14% during that time.
Let’s take a look at the medium-to-long-term trends, and see if they have been consistent with shareholder returns.
Our analysis shows that GODREJCP is probably worthless!
According to Buffett, ‘Trains will run around the world but the Flat Earth Society will run smoothly. There will continue to be a wide gap between price and market value…’ One crude but reasonable way to see how sentiment around a company has changed is to compare earnings per share (EPS) and share price.
During the five years of share price growth, Godrej Consumer Products grew its earnings per share (EPS) by 6.0% annually. This EPS growth is very close to the 6% annual average for the share price. This shows that the market sentiment surrounding the company has not changed much during that time. In fact, the share price seems to reflect EPS growth.
The graphs below show how EPS has changed over time (reveal the exact values by clicking on the image).
We think it’s good that insiders made a lot of purchases in the last year. However, future earnings will be more important if the shareholders make money. It might be worth looking into free Report on the financial results of the company Godrej Consumer Products, Inc.
What About The Total Shareholder Return (TSR)?
We have already discussed the share price of Godrej Consumer Products, but we should also mention the total stock return (TSR). Arguably, TSR is an adequate return ratio because it takes into account the value of dividends (as if they were repaid), along with the value of the net cash dividends paid to shareholders. Its dividend payout track record means that Godrej Consumer Products’ TSR of 37% over the last 5 years is better than the price return.
A Different View
While the broader market has gained around 3.3% in the last year, its major shareholder Godrej Consumer Products has lost 14%. However, remember that even the best stocks will sometimes not outperform the market for twelve months. On the bright side, long-term shareholders will make money, earning a 7% annual return over ten years. If demand data continues to show sustained growth over the long term, current sales may be an opportunity worth considering. It’s good that insiders have been buying stocks, but we suggest you check here to see what price insiders are buying.
Godrej Consumer Products are not the only products that consumers are buying. For those who like to find gain money this free a list of growing companies that are currently buying inside, may be just the ticket.
Please note, the market returns mentioned in this article reflect the average market returns that trade on IN.
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This article by Simply Wall St is more general in nature. We provide reviews based on historical data and expert forecasts using unbiased methods and our articles are not intended to be financial advice. It does not make recommendations to buy or sell any stock, and does not take into account your goals, or financial situation. We want to bring you long-term analytics driven by meaningful data. Note that our analysis may not be influenced by recent company announcements or stock prices. Simply Wall St has no position in any of the listed stocks.