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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Advanced Enzyme Technologies Limited (NSE:ADVENZYMES) share price is down 32% in the last year. . That falls noticeably short of the market return of around -6.2%. Advanced Enzyme Technologies hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it's down 17% in about a quarter, which is even more concerning. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
View our latest analysis for Advanced Enzyme Technologies
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and 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 Advanced Enzyme Technologies share price fell, it actually saw its earnings per share (EPS) improve by 27%. It's quite possible that growth expectations may have been unreasonable in the past. It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.
Given the yield is quite low, at 0.3%, we doubt the dividend can shed much light on the share price. Advanced Enzyme Technologies's revenue is actually up 14% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
We know that Advanced Enzyme Technologies has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Advanced Enzyme Technologies will earn in the future (free profit forecasts)
A Different Perspective
We doubt Advanced Enzyme Technologies shareholders are happy with the loss of 32% over twelve months (even including dividends). That falls short of the market, which lost 6.2%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 17%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. If you would like to research Advanced Enzyme Technologies in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Advanced Enzyme Technologies may not be the best stock to buy. So you may wish to see this freecollection 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.We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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