The one-year shareholder returns and company earnings persist lower as Stove Kraft (NSE:STOVEKRAFT) stock falls a further 10% in past week

The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Stove Kraft Limited (NSE:STOVEKRAFT) share price is down 43% in the last year. That's well below the market decline of 2.6%. Stove Kraft may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 34% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for Stove Kraft isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Stove Kraft

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Unfortunately Stove Kraft reported an EPS drop of 17% for the last year. This reduction in EPS is not as bad as the 43% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how Stove Kraft has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Stove Kraft's financial health with this free report on its balance sheet.

A Different Perspective

Stove Kraft shareholders are down 43% for the year, even worse than the market loss of 2.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 34%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Stove Kraft that you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.