Honda India Power Products' (NSE:HONDAPOWER) Shareholders Are Down 24% On Their Shares

While not a mind-blowing move, it is good to see that the Honda India Power Products Limited (NSE:HONDAPOWER) share price has gained 30% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 24% in the last three years, significantly under-performing the market.

View our latest analysis for Honda India Power Products

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.

What about the Total Shareholder Return (TSR)?

We've already covered Honda India Power Products' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Honda India Power Products' TSR of was a loss of 23% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Honda India Power Products shareholders have received a total shareholder return of 14% over the last year. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.6% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Take risks, for example - Honda India Power Products has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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