Huhtamaki India's (NSE:HUHTAMAKI) one-year decline in earnings translates into losses for shareholders

While not a mind-blowing move, it is good to see that the Huhtamaki India Limited (NSE:HUHTAMAKI) share price has gained 14% in the last three months. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 42% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added ₹1.8b to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

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To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Unfortunately Huhtamaki India reported an EPS drop of 82% for the last year. The share price fall of 42% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

It is of course excellent to see how Huhtamaki India has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Huhtamaki India stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Huhtamaki India shareholders are down 42% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 5.1%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Huhtamaki India you should be aware of.

We will like Huhtamaki India better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 Indian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.