The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Zuari Global Limited (NSE:ZUARIGLOB) have tasted that bitter downside in the last year, as the share price dropped 47%. That falls noticeably short of the market return of around 8.1%. To make matters worse, the returns over three years have also been really disappointing (the share price is 40% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 17% in the last 90 days.
See our latest analysis for Zuari Global
Given that Zuari Global didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Zuari Global saw its revenue grow by 25%. That’s definitely a respectable growth rate. Meanwhile, the share price is down 47% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. However, that’s in the past now, and it’s the future that matters most.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Zuari Global’s balance sheet strength is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
Investors should note that there’s a difference between Zuari Global’s total shareholder return (TSR) and its share price change, which we’ve covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Zuari Global shareholders, and that cash payout explains why its total shareholder loss of 46%, over the last year, isn’t as bad as the share price return.
A Different Perspective
Investors in Zuari Global had a tough year, with a total loss of 46% (including dividends) , against a market gain of about 8.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8.4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
But note: Zuari Global 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.