Despite the downward trend in earnings at Summit Securities (NSE:SUMMITSEC), the stock is up 10%, representing a five-year gain of 508%.

Long-term investing can be life-changing when you buy and hold truly great companies. And for top-quality companies, share prices can rise enormously. For example this Summit Securities Limited (NSE:SUMMITSEC) The share price is up a whopping 508% over the last half decade, a handsome return for long-term holders. This just shows the value creation that some companies can achieve. It’s also good to see the share price is up 44% in the last quarter. We’re really pleased that the share price has performed so well for investors.

The past week has proven to be lucrative for Summit Securities investors. So let’s look at whether the fundamentals have driven the company’s five-year performance.

Check out our latest analysis for Summit Securities

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

During five years of share price growth, Summit Securities actually saw its earnings per share decline by 8.1% per year.

Fundamentally, investors are unlikely to focus on earnings per share. Since the change in earnings per share does not seem to correlate with the change in the share price, it is worth taking a look at other metrics.

The decline in sales of 4.4% per year is not positive. So it seems that one needs to take a closer look at the earnings and sales trends to see how they might influence the share price.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We are pleased to report that the CEO receives more modest compensation than most CEOs of similarly capitalized companies. It’s always worth keeping an eye on CEO salaries, but a more important question is whether the company will grow profits over the years. Dive deeper into earnings by checking out this interactive graph of Summit Securities’ earnings, revenue and cash flow.

A different perspective

It’s good to see that Summit Securities shareholders received a total return of 183% over the last year. That’s better than its annual return of 43% over half a decade, meaning the company has been doing better recently. Someone with an optimistic perspective might see the recent improvement in TSR as an indication that the business itself is getting better over time. I find it very interesting to look at the share price as an indicator of business development in the long term. But to gain real insight, we need to consider other information too. For example risks. Every company has them, and we discovered them 2 warning signs for Summit Securities (1 of which cannot be ignored!) that you should know about.

We’ll like Summit Securities better if we see some big insider buying. Check this out while we wait free List of undervalued stocks (mainly small caps) with significant, recent insider 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 does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.