Would Shareholders Who Purchased Parag Milk Foods' (NSE:PARAGMILK) Stock Three Years Be Happy With The Share price Today?

If you love investing in stocks you're bound to buy some losers. But the long term shareholders of Parag Milk Foods Limited (NSE:PARAGMILK) have had an unfortunate run in the last three years. Sadly for them, the share price is down 63% in that time.

Check out our latest analysis for Parag Milk Foods

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Parag Milk Foods saw its EPS decline at a compound rate of 26% per year, over the last three years. This change in EPS is reasonably close to the 28% average annual decrease in the share price. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. It seems like the share price is reflecting the declining earnings per share.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into Parag Milk Foods' key metrics by checking this interactive graph of Parag Milk Foods's earnings, revenue and cash flow.

A Different Perspective

Parag Milk Foods shareholders are down 11% for the year, (even including dividends), but the broader market is up 23%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. However, the loss over the last year isn't as bad as the 18% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. 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 Parag Milk Foods (1 doesn't sit too well with us!) that you should be aware of before investing here.

We will like Parag Milk Foods better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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