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Long-term investing can be life-changing when you buy and hold truly great businesses. While the best companies are hard to find, they can generate huge returns over the long term. For example, Dewei Information Technology Co., Ltd. (NSE:DEVIT) shares are up 808% over the past five years, which represents a solid return for long-term holders. If that doesn’t make you consider long-term investing, we don’t know what will. On top of that, shares are up 19% in about a quarter. But the move was likely helped by a fairly active market (up 20% in 90 days). We’re really pleased to see such great share price performance from investors.
After the past week’s strong gains, it will be interesting to see whether long-term returns are driven by improving fundamentals.
Check out our latest analysis for Development Information Technology
While some continue to promote the efficient markets hypothesis, it turns out that markets are overreactive dynamic systems and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes toward a company have changed over time.
Over the course of five years of share price growth, Dev Information Technology has achieved compound earnings per share (EPS) growth of 12% per year. This earnings per share growth is lower than the average annual share price increase of 55%. So it’s fair to assume that the market views the business more highly than it did five years ago. That’s not necessarily surprising, given the five-year track record of earnings growth. This favorable sentiment is reflected in its (rather optimistic) price-to-earnings ratio of 45.63.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
take a look at our free Report on Dev Information Technology’s earnings, revenue and cash flow.
What about dividends?
When considering return on investment, it is important to consider the difference between the two total shareholder return (TSR) and share price return. While 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. It’s fair to say that TSR gives a more complete picture of stocks that pay dividends. We note that Dev Information Technology’s TSR over the last 5 years was 826%, which is better than the share price return mentioned above.Dividends paid by companies thus boosted all Shareholder returns.
Different perspectives
It’s good to see that Dev Information Technology shareholders received a total shareholder return of 56% last year. This does include dividends. However, this is lower than the 56% total shareholder return it has delivered to shareholders each year over five years. It’s always interesting to track long-term share price performance. But to better understand developing information technology, we need to consider many other factors.For example, we have determined 3 warning signs for developing information technology You should know this.
But please note: Development Information Technology may not be the best stock to buy.So take a look at this free List of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on Indian exchanges.
Valuation is complex, but we’re helping to make it simple.
Find out if Dev Information Technology is potentially overvalued or undervalued by checking out our comprehensive analysis, which includes Fair value estimates, risks and warnings, dividends, insider trading and financial health.
View free analysis
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This article from Simply Wall St is general in nature. We only use unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended to provide financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative information. Simply Wall St does not hold a position in any of the stocks mentioned.
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