Diversification is a key tool for dealing with stock price volatility. Of course, in an ideal world, all your stocks would beat the market. Dhanuka Agritech Limited (NSE:DHANUKA) has done well over the last year, with the stock price up 83% beating the market return of 76% (not including dividends). However, the longer term returns haven't been so impressive, with the stock up just 24% in the last three years.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Dhanuka Agritech was able to grow EPS by 57% in the last twelve months. The share price gain of 83% certainly outpaced the EPS growth. This indicates that the market is now more optimistic about the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Dhanuka Agritech has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.
A Different Perspective
Dhanuka Agritech provided a TSR of 83% over the year (including dividends). That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 4% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand Dhanuka Agritech better, we need to consider many other factors. For example, we've discovered 2 warning signs for Dhanuka Agritech that you should be aware of before investing here.
But note: Dhanuka Agritech 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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