Does Hisar Metal Industries’s (NSE:HISARMETAL) Share Price Gain of 75% Match Its Business Performance?

By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, the Hisar Metal Industries Limited (NSE:HISARMETAL) share price is up 75% in the last three years, clearly besting the market return of around 26% (not including dividends). On the other hand, the returns haven’t been quite so good recently, with shareholders up just 50% , including dividends .

View 4 warning signs we detected for Hisar Metal Industries

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.

Hisar Metal Industries was able to grow its EPS at 70% per year over three years, sending the share price higher. The average annual share price increase of 20% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. We’d venture the lowish P/E ratio of 6.19 also reflects the negative sentiment around the stock.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NSEI:HISARMETAL Past and Future Earnings, January 13th 2020
NSEI:HISARMETAL Past and Future Earnings, January 13th 2020

While the share price will often move with EPS, other factors can also play a role. For example, we’ve discovered 4 warning signs for Hisar Metal Industries (of which 3 are major) which any shareholder or potential investor should be aware of.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Hisar Metal Industries, it has a TSR of 84% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It’s nice to see that Hisar Metal Industries shareholders have gained 50% (in total) over the last year. And yes, that does include the dividend. That gain actually surpasses the 23% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting Hisar Metal Industries on your watchlist. Before spending more time on Hisar Metal Industries it might be wise to click here to see if insiders have been buying or selling shares.

But note: Hisar Metal Industries 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.

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.

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. Thank you for reading.