R.P.P. Infra Projects (NSE:RPPINFRA) sheds 13% this week, as yearly returns fall more in line with earnings growth

R.P.P. Infra Projects Limited (NSE:RPPINFRA) shareholders might be concerned after seeing the share price drop 25% in the last month. In contrast, the return over three years has been impressive. In three years the stock price has launched 163% higher: a great result. After a run like that some may not be surprised to see prices moderate. Only time will tell if there is still too much optimism currently reflected in the share price.

In light of the stock dropping 13% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

Check out our latest analysis for R.P.P. Infra Projects

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.

During three years of share price growth, R.P.P. Infra Projects achieved compound earnings per share growth of 31% per year. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 38% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Au contraire, the share price change has arguably mimicked the EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into R.P.P. Infra Projects' key metrics by checking this interactive graph of R.P.P. Infra Projects's earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that R.P.P. Infra Projects shareholders have received a total shareholder return of 119% over one year. That's better than the annualised return of 20% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand R.P.P. Infra Projects better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with R.P.P. Infra Projects (including 1 which is concerning) .

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 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.