What Type Of Returns Would Jain Irrigation Systems'(NSE:JISLDVREQS) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

Jain Irrigation Systems Limited (NSE:JISLDVREQS) shareholders will doubtless be very grateful to see the share price up 97% in the last quarter. But the last three years have seen a terrible decline. To wit, the share price sky-dived 80% in that time. So it's about time shareholders saw some gains. But the more important question is whether the underlying business can justify a higher price still.

View our latest analysis for Jain Irrigation Systems

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Over the three years that the share price declined, Jain Irrigation Systems' earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

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

This free interactive report on Jain Irrigation Systems' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Jain Irrigation Systems shareholders are down 12% for the year (even including dividends), but the market itself is up 10%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn't as bad as the 11% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. 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 - Jain Irrigation Systems has 5 warning signs (and 2 which can't be ignored) we think you should know about.

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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