Investors Who Bought Hindustan Foods (NSE:HNDFDS) Shares A Year Ago Are Now Up 56%

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Hindustan Foods Limited (NSE:HNDFDS) share price is 56% higher than it was a year ago, much better than the market return of around 2.2% (not including dividends) in the same period. So that should have shareholders smiling. We'll need to follow Hindustan Foods for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Hindustan Foods

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Hindustan Foods was able to grow EPS by 35% in the last twelve months. This EPS growth is significantly lower than the 56% increase in the share price. This indicates that the market is now more optimistic about the stock. The fairly generous P/E ratio of 83.82 also points to this optimism.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Hindustan Foods' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Hindustan Foods shareholders should be happy with the total gain of 56% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 57% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Hindustan Foods (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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