Cholamandalam Financial Holdings (NSE:CHOLAHLDNG) Share Prices Have Dropped 26% In The Last Year

It is a pleasure to report that the Cholamandalam Financial Holdings Limited (NSE:CHOLAHLDNG) is up 31% in the last quarter. But in truth the last year hasn't been good for the share price. In fact the stock is down 26% in the last year, well below the market return.

Check out our latest analysis for Cholamandalam Financial Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, Cholamandalam Financial Holdings had to report a 21% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 26% decrease in the share price. Given the lower EPS we might have expected investors to lose confidence in the stock, but that doesn't seemed to have happened. Rather, the share price has approximately tracked EPS growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Cholamandalam Financial Holdings' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Given that the market gained 4.5% in the last year, Cholamandalam Financial Holdings shareholders might be miffed that they lost 26% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Putting aside the last twelve months, it's good to see the share price has rebounded by 31%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Cholamandalam Financial Holdings (including 1 which is is significant) .

Cholamandalam Financial Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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