Optimism for Igarashi Motors India (NSE:IGARASHI) has grown this past week, despite three-year decline in earnings

Igarashi Motors India Limited (NSE:IGARASHI) shareholders might be concerned after seeing the share price drop 13% in the last quarter. But at least the stock is up over the last three years. In that time, it is up 45%, which isn't bad, but not amazing either.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Igarashi Motors India

While Igarashi Motors India made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years Igarashi Motors India has grown its revenue at 8.0% annually. That's pretty nice growth. The annual gain of 13% over three years is better than nothing, but hardly impresses. So it's possible that expectations were elevated in the past, muting returns over three years. However, if you can reasonably expect profits in the next few years, this stock might belong on your watchlist.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Igarashi Motors India shareholders gained a total return of 22% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 7% per year over five year. This suggests the company might be improving over time. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Igarashi Motors India (of which 1 is potentially serious!) you should know about.

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 Indian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.