Reflecting on GIC Housing Finance's (NSE:GICHSGFIN) Share Price Returns Over The Last Three Years

While it may not be enough for some shareholders, we think it is good to see the GIC Housing Finance Limited (NSE:GICHSGFIN) share price up 18% in a single quarter. But the last three years have seen a terrible decline. To wit, the share price sky-dived 73% in that time. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still.

Check out our latest analysis for GIC Housing Finance

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years that the share price fell, GIC Housing Finance's earnings per share (EPS) dropped by 68% each year. The recent extraordinary items made their mark on profits. This fall in the EPS is worse than the 35% 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. This positive sentiment is also reflected in the generous P/E ratio of 116.94.

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

This free interactive report on GIC Housing Finance's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in GIC Housing Finance had a tough year, with a total loss of 22% (including dividends), against a market gain of about 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand GIC Housing Finance better, we need to consider many other factors. Take risks, for example - GIC Housing Finance has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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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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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