Housing and Urban Development's (NSE:HUDCO) Shareholders Are Down 53% On Their Shares

Housing and Urban Development Corporation Limited (NSE:HUDCO) shareholders should be happy to see the share price up 20% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 53% in the last three years, significantly under-performing the market.

See our latest analysis for Housing and Urban Development

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

During the unfortunate three years of share price decline, Housing and Urban Development actually saw its earnings per share (EPS) improve by 9.0% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

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 note that the dividend seems healthy enough, so that probably doesn't explain the share price drop. Housing and Urban Development has maintained its top line over three years, so we doubt that has shareholders worried. A closer look at revenue and profit trends might yield insights.

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

This free interactive report on Housing and Urban Development's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Housing and Urban Development's TSR for the last 3 years was -46%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

While the market return was 16% in the last year, Housing and Urban Development returned 15% to shareholders. Given the three-year TSR of 14% per year, shareholders probably aren't too concerned by the recent gain! It could well be that the business is getting back on track. It's always interesting to track share price performance over the longer term. But to understand Housing and Urban Development 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 Housing and Urban Development (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

Of course Housing and Urban Development may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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