Aditya Birla Capital's (NSE:ABCAPITAL) Stock Price Has Reduced 57% In The Past Three Years

While it may not be enough for some shareholders, we think it is good to see the Aditya Birla Capital Limited (NSE:ABCAPITAL) share price up 28% in a single quarter. Meanwhile over the last three years the stock has dropped hard. Regrettably, the share price slid 57% in that period. So it's good to see it climbing back up. After all, could be that the fall was overdone.

Check out our latest analysis for Aditya Birla Capital

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).

Aditya Birla Capital saw its EPS decline at a compound rate of 12% per year, over the last three years. The share price decline of 24% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Aditya Birla Capital's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Over the last year, Aditya Birla Capital shareholders took a loss of 16%. In contrast the market gained about 17%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. However, the loss over the last year isn't as bad as the 16% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand Aditya Birla Capital better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Aditya Birla Capital (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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