How Much Did CARE Ratings'(NSE:CARERATING) Shareholders Earn From Share Price Movements Over The Last Three Years?

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term CARE Ratings Limited (NSE:CARERATING) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 65% in that time. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days.

View our latest analysis for CARE Ratings

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).

CARE Ratings saw its EPS decline at a compound rate of 21% per year, over the last three years. The share price decline of 30% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into CARE Ratings' key metrics by checking this interactive graph of CARE Ratings's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for CARE Ratings the TSR over the last 3 years was -60%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

CARE Ratings provided a TSR of 4.7% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 7% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand CARE Ratings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with CARE Ratings , and understanding them should be part of your investment process.

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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