Reflecting on Thermax's (NSE:THERMAX) Share Price Returns Over The Last Three Years

It is doubtless a positive to see that the Thermax Limited (NSE:THERMAX) share price has gained some 31% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 28% in the last three years, significantly under-performing the market.

Check out our latest analysis for Thermax

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the three years that the share price fell, Thermax's earnings per share (EPS) dropped by 10% each year. So do you think it's a coincidence that the share price has dropped 10% per year, a very similar rate to the EPS? We don't. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. In this case, it seems that the EPS is guiding the share price.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

While the broader market gained around 21% in the last year, Thermax shareholders lost 11% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Thermax better, we need to consider many other factors. For example, we've discovered 3 warning signs for Thermax that you should be aware of before investing here.

But note: Thermax may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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