Reflecting on Tourism Finance Corporation of India's (NSE:TFCILTD) Share Price Returns Over The Last Three Years

Tourism Finance Corporation of India Limited (NSE:TFCILTD) shareholders will doubtless be very grateful to see the share price up 31% in the last month. But that is small recompense for the exasperating returns over three years. Regrettably, the share price slid 70% in that period. So it is really good to see an improvement. While many would remain nervous, there could be further gains if the business can put its best foot forward.

View our latest analysis for Tourism Finance Corporation of India

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years of share price decline, Tourism Finance Corporation of India actually saw its earnings per share (EPS) improve by 1.3% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

It's pretty reasonable to suspect the market was previously to bullish on the stock, and has since moderated expectations. However, taking a look at other business metrics might shed a bit more light on the share price action.

We think that the revenue decline over three years, at a rate of 3.9% per year, probably had some shareholders looking to sell. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Tourism Finance Corporation of India's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 17% in the last year, Tourism Finance Corporation of India shareholders lost 38%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.3% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Tourism Finance Corporation of India (1 is potentially serious!) that you should be aware of before investing here.

Tourism Finance Corporation of India is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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