Did You Miss Amber Enterprises India's (NSE:AMBER) Impressive 115% Share Price Gain?

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Amber Enterprises India Limited (NSE:AMBER) share price has soared 115% in the last year. Most would be very happy with that, especially in just one year! On top of that, the share price is up 20% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 22% in 90 days). Amber Enterprises India hasn't been listed for long, so it's still not clear if it is a long term winner.

See our latest analysis for Amber Enterprises India

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 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 last year, Amber Enterprises India actually saw its earnings per share drop 57%.

Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 0.1% dividend yield is doing much to support the share price. Unfortunately Amber Enterprises India's fell 23% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Amber Enterprises India is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Amber Enterprises India in this interactive graph of future profit estimates.

A Different Perspective

Amber Enterprises India boasts a total shareholder return of 115% for the last year (that includes the dividends) . The more recent returns haven't been as impressive as the longer term returns, coming in at just 20%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Amber Enterprises India better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Amber Enterprises India 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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