If You Had Bought ICICI Securities' (NSE:ISEC) Shares A Year Ago You Would Be Down 21%

It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in ICICI Securities Limited (NSE:ISEC) have tasted that bitter downside in the last year, as the share price dropped 21%. That contrasts poorly with the market return of 28%. ICICI Securities hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. It's down 3.7% in the last seven days.

Check out our latest analysis for ICICI Securities

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

During the unfortunate twelve months during which the ICICI Securities share price fell, it actually saw its earnings per share (EPS) improve by 76%. Of course, the situation might betray previous over-optimism about growth.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's easy to justify a look at some other metrics.

ICICI Securities' revenue is actually up 42% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We know that ICICI Securities has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for ICICI Securities in this interactive graph of future profit estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of ICICI Securities, it has a TSR of -18% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While ICICI Securities shareholders are down 18% for the year (even including dividends), the market itself is up 28%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 9.8%, 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. It's always interesting to track share price performance over the longer term. But to understand ICICI Securities better, we need to consider many other factors. For example, we've discovered 4 warning signs for ICICI Securities (2 don't sit too well with us!) that you should be aware of before investing here.

But note: ICICI Securities may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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