CreditAccess Grameen's (NSE:CREDITACC) underlying earnings growth outpaced the favorable return generated for shareholders over the past three years

It hasn't been the best quarter for CreditAccess Grameen Limited (NSE:CREDITACC) shareholders, since the share price has fallen 27% in that time. But that doesn't change the fact that the returns over the last three years have been respectable. It beat the market return of 65% in that time, gaining 71%.

Although CreditAccess Grameen has shed ₹8.3b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for CreditAccess Grameen

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

CreditAccess Grameen was able to grow its EPS at 166% per year over three years, sending the share price higher. The average annual share price increase of 19% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. We'd venture the lowish P/E ratio of 10.46 also reflects the negative sentiment around the stock.

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

We know that CreditAccess Grameen has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling CreditAccess Grameen stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Investors in CreditAccess Grameen had a tough year, with a total loss of 48% (including dividends), against a market gain of about 30%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Take risks, for example - CreditAccess Grameen has 2 warning signs (and 1 which is significant) we think you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.