Equitas Holdings (NSE:EQUITAS) Share Prices Have Dropped 67% In The Last Three Years

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Equitas Holdings Limited (NSE:EQUITAS) have had an unfortunate run in the last three years. So they might be feeling emotional about the 67% share price collapse, in that time. The more recent news is of little comfort, with the share price down 52% in a year. It's down 6.3% in the last seven days.

Check out our latest analysis for Equitas Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Although the share price is down over three years, Equitas Holdings actually managed to grow EPS by 17% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We note that the dividend seems healthy enough, so that probably doesn't explain the share price drop. We like that Equitas Holdings has actually grown its revenue over the last three years. But it's not clear to us why the share price is down. It might be worth diving deeper into the fundamentals, lest an opportunity goes begging.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling Equitas Holdings stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Over the last year, Equitas Holdings shareholders took a loss of 51%, including dividends. In contrast the market gained about 2.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 19% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Equitas Holdings better, we need to consider many other factors. For example, we've discovered 2 warning signs for Equitas Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.

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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