What Would Shareholders Who Purchased Shalimar Paints'(NSE:SHALPAINTS) Stock Three Years Ago Be Earning on Their Investment Today?

Shalimar Paints Limited (NSE:SHALPAINTS) shareholders will doubtless be very grateful to see the share price up 34% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 65% in the last three years, significantly under-performing the market.

Check out our latest analysis for Shalimar Paints

Shalimar Paints isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, Shalimar Paints saw its revenue grow by 1.9% per year, compound. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 18% for the last three years. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). After all, growing a business isn't easy, and the process will not always be smooth.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Shalimar Paints stock, you should check out this FREE detailed report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Shalimar Paints' share price action, but we should also mention its total shareholder return (TSR). 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. Dividends have been really beneficial for Shalimar Paints shareholders, and that cash payout explains why its total shareholder loss of 36%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

Shalimar Paints provided a TSR of 6.4% over the last twelve months. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 5.8% per year over five year. It is possible that returns will improve along with the business fundamentals. 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 4 warning signs for Shalimar Paints you should be aware of, and 2 of them don't sit too well with us.

But note: Shalimar Paints may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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