If You Had Bought Sutlej Textiles and Industries' (NSE:SUTLEJTEX) Shares Three Years Ago You Would Be Down 70%

While not a mind-blowing move, it is good to see that the Sutlej Textiles and Industries Limited (NSE:SUTLEJTEX) share price has gained 15% in the last three months. But that doesn't change the fact that the returns over the last three years have been disappointing. In that time, the share price dropped 70%. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.

View our latest analysis for Sutlej Textiles and Industries

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the three years that the share price declined, Sutlej Textiles and Industries' earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But it's safe to say we'd generally expect the share price to be lower as a result!

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Sutlej Textiles and Industries' key metrics by checking this interactive graph of Sutlej Textiles and Industries's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Sutlej Textiles and Industries' total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Sutlej Textiles and Industries' TSR, which was a 68% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Investors in Sutlej Textiles and Industries had a tough year, with a total loss of 8.4% (including dividends), against a market gain of about 4.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 7% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Case in point: We've spotted 5 warning signs for Sutlej Textiles and Industries you should be aware of, and 2 of them are significant.

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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