If You Had Bought Gujarat Mineral Development's (NSE:GMDCLTD) Shares Three Years Ago You Would Be Down 75%

As an investor, mistakes are inevitable. But really big losses can really drag down an overall portfolio. So spare a thought for the long term shareholders of Gujarat Mineral Development Corporation Limited (NSE:GMDCLTD); the share price is down a whopping 75% in the last three years. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. And more recent buyers are having a tough time too, with a drop of 27% in the last year. It's down 1.4% in the last seven days.

View our latest analysis for Gujarat Mineral Development

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. 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.

Gujarat Mineral Development saw its EPS decline at a compound rate of 9.0% per year, over the last three years. The share price decline of 37% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 5.60.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

This free interactive report on Gujarat Mineral Development's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Gujarat Mineral Development shareholders are down 27% for the year (even including dividends), but the market itself is up 2.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Gujarat Mineral Development is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

We will like Gujarat Mineral Development better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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