Motilal Oswal Financial Services’ (NSE:MOTILALOFS) CAGR of 14% outperformed the company’s earnings growth over the same five-year period

If you buy and hold a stock for many years, you hope to make a profit. Also, you generally want the stock price to rise faster than the market. but Motilal Oswal Financial Services Limited (NSE: MOTILALOFS) missed that second target, with its share price up 80% over five years, below the market return. On the plus side, newer shareholders are likely to be more comfortable with the 50% 12-month share price gain.

After a solid 7-day performance, let’s review the role company fundamentals played in driving long-term shareholder returns.

Check out our latest analysis for Motilal Oswal Financial Services

Freely adapted from Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a scale. A flawed but reasonable way to assess how sentiment has changed at a company is to compare earnings per share (EPS) to stock price.

During five years of share price growth, Motilal Oswal Financial Services moved from a loss to profitability. This is generally viewed as a really positive, so we would expect the share price to rise.

Below you can see how the EPS has changed over time (discover the exact values ​​by clicking on the image).

NSEI: MOTILALOFS Earnings Per Share Growth, Jan 14, 2022

We take it as a positive that insiders have made significant purchases over the past year. However, most people consider the earnings and revenue growth trends to be a more meaningful guide for the company. Dig deeper into earnings by checking out this interactive chart of Motilal Oswal Financial Services earnings, earnings and cash flows.

What about dividends?

It’s important to consider total shareholder returns as well as stock price returns for a particular stock. The TSR takes into account the value of any demerger or discounted capital increase along with any dividends based on the assumption that the dividends will be reinvested. So for companies that pay a generous dividend, TSR is often much higher than the stock price return. Coincidentally, Motilal Oswal Financial Services’ TSR over the last 5 years has been 89%, which beats the previously mentioned share price return. This is mainly due to the dividend payments!

A different perspective

It’s good to see that Motilal Oswal Financial Services has rewarded shareholders with a total return of 52% over the past 12 months. And that includes the dividend. That gain is better than the five-year annual TSR, which is 14%. Therefore, the mood in the company seems to have been positive lately. As share price momentum remains strong, it might be worth giving the stock a closer look so you don’t miss an opportunity. I find it very interesting to look at the share price as an indicator of business development over the long term. But to really gain insight, we need to consider other information as well. For example, we have identified 3 warning signs for Motilal Oswal Financial Services (1 is a little awkward) that you should be aware of.

Motilal Oswal Financial Services isn’t the only stock insiders are buying. For those who like to find win investments this for free List of growing companies with recent insider purchases might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on IN exchanges.

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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