Shriram EPC's(NSE:SHRIRAMEPC) Share Price Is Down 85% Over The Past Three Years.

It is doubtless a positive to see that the Shriram EPC Limited (NSE:SHRIRAMEPC) share price has gained some 36% in the last three months. But that doesn't change the fact that the returns over the last three years have been stomach churning. To wit, the share price sky-dived 85% in that time. Arguably, the recent bounce is to be expected after such a bad drop. The thing to think about is whether the business has really turned around.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for Shriram EPC

Because Shriram EPC made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over three years, Shriram EPC grew revenue at 7.8% per year. That's not a very high growth rate considering it doesn't make profits. But the share price crash at 23% per year does seem a bit harsh! We generally don't try to 'catch the falling knife'. Of course, revenue growth is nice but generally speaking the lower the profits, the riskier the business - and this business isn't making steady profits.

The graphic below depicts how earnings and revenue have changed over time (unveil 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

Shriram EPC shareholders gained a total return of 16% during the year. 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 13% endured over half a decade. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Shriram EPC better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Shriram EPC .

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 IN exchanges.

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