If You Had Bought Kalyani Steels (NSE:KSL) Shares A Year Ago You'd Have Earned 116% Returns

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Kalyani Steels Limited (NSE:KSL) share price has soared 116% return in just a single year. Also pleasing for shareholders was the 24% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 14% in 90 days). The longer term returns have not been as good, with the stock price only 5.3% higher than it was three years ago.

Check out our latest analysis for Kalyani Steels

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over the last twelve months, Kalyani Steels actually shrank its EPS by 11%.

Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We are skeptical of the suggestion that the 1.6% dividend yield would entice buyers to the stock. Kalyani Steels' revenue actually dropped 13% over last year. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Kalyani Steels stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Kalyani Steels shareholders have received a total shareholder return of 116% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Kalyani Steels better, we need to consider many other factors. Take risks, for example - Kalyani Steels has 1 warning sign we think you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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