Stock Analysis

What Type Of Returns Would Ujjivan Financial Services'(NSE:UJJIVAN) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

NSEI:UJJIVAN
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For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Ujjivan Financial Services Limited (NSE:UJJIVAN) shareholders have had that experience, with the share price dropping 33% in three years, versus a market return of about 29%. Furthermore, it's down 21% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Ujjivan Financial Services

Ujjivan Financial Services isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, Ujjivan Financial Services grew revenue at 30% per year. That's well above most other pre-profit companies. The share price drop of 10% per year over three years would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. It's possible that the prior share price assumed unrealistically high future growth. Still, with high hopes now tempered, now might prove to be an opportunity to buy.

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

earnings-and-revenue-growth
NSEI:UJJIVAN Earnings and Revenue Growth March 17th 2021

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Ujjivan Financial Services shareholders are up 10% for the year (even including dividends). It's always nice to make money but this return falls short of the market return which was about 72% for the year. The silver lining is that the recent rise is far preferable to the annual loss of 10% that shareholders have suffered over the last three years. It could well be that the business is stabilizing. 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. Take risks, for example - Ujjivan Financial Services has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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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