The three-year shareholder returns and company earnings persist lower as Mahindra CIE Automotive (NSE:MAHINDCIE) stock falls a further 5.0% in past week

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Mahindra CIE Automotive Limited (NSE:MAHINDCIE) shareholders, since the share price is down 12% in the last three years, falling well short of the market return of around 71%. The share price has dropped 28% in three months.

With the stock having lost 5.0% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Mahindra CIE Automotive

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Mahindra CIE Automotive saw its EPS decline at a compound rate of 8.2% per year, over the last three years. This fall in the EPS is worse than the 4% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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 Mahindra CIE Automotive's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Mahindra CIE Automotive provided a TSR of 5.4% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 0.1% endured over half a decade. It could well be that the business is stabilizing. 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 - Mahindra CIE Automotive has 1 warning sign we think you should be aware of.

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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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.