Total returns for investors in Tourism Finance Corporation of India (NSE:TFCILTD) have grown faster than earnings growth over the past three years

It wasn’t the best quarter for Tourism Finance Corporation of India Limited (NSE:TFCILTD) shareholders, as the share price has fallen 23% in that time. The three-year return, on the other hand, is impressive. In fact, the stock price is up a whopping 160% compared to three years ago. It’s not unusual for a stock price to bounce back a bit after a big gain. Fundamental business performance will ultimately determine if the top is in, or if this is a great buying opportunity.

Since the long-term performance is good, but there has been an 11% decline recently, let’s see if the fundamentals match the share price.

Check out our latest analysis for Tourism Finance Corporation of India

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment and not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has changed is to compare the change in the earnings per share (EPS) with the share price movement.

Tourism Finance Corporation of India was able to grow its earnings per share by 3.7% per year in three years, causing its share price to rise. By comparison, the share price increase of 37% per year exceeds the growth in earnings per share. This indicates that the market is more bullish on the stock after recent years of progress. It’s very common for investors to fall in love with a company after a few years of solid progress.

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

This free An interactive report on Tourism Finance Corporation of India’s earnings, revenue and cash flow is a great place to start if you want to investigate the stock further.

What about dividends?

It’s important to consider the total shareholder return and share price return for any stock. The TSR is a return calculation that takes into account the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. For companies that pay a generous dividend, the TSR is often a lot higher than the share price return. Coincidentally, Tourism Finance Corporation of India’s TSR for the last three years was 175%, which is higher than the share price return mentioned earlier. This is largely a result of the dividend payments!

a different perspective

It’s nice to see that Tourism Finance Corporation of India shareholders have received a total shareholder return of 124% over the last year. That includes the dividend. That’s better than the annualized return of 9% over half a decade, implying the company is doing better lately. Given that the share price momentum remains strong, it might be worth taking a closer look at the stock so you don’t miss an opportunity. It is always interesting to follow the price development of shares in the longer term. But to understand the Tourism Finance Corporation of India better, we need to consider many other factors. Example: We’ve seen it 5 warning signs for Tourism Finance Corporation of India that you should be aware of, and 1 of them does not suit us very well.

If you’re like me, you will too not don’t want to miss this free list of growing companies 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.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.