Rain Industries (NSE:RAIN shareholders incur further losses as stock declines 12% this week, taking three-year losses to 36%

For many investors, the main point of stock picking is to generate higher returns than the overall market. But if you try your hand at stock picking, you risk returning less than the market. We regret to report that long term Rain Industries Limited (NSE:RAIN) shareholders have had that experience, with the share price dropping 38% in three years, versus a market return of about 49%. More recently, the share price has dropped a further 19% in a month.

If the past week is anything to go by, investor sentiment for Rain Industries isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Rain Industries

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the three years that the share price declined, Rain Industries' earnings per share (EPS) dropped significantly, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Dive deeper into Rain Industries' key metrics by checking this interactive graph of Rain Industries's earnings, revenue and cash flow.

A Different Perspective

Rain Industries provided a TSR of 5.5% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 5% over half a decade This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Rain Industries better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Rain Industries (including 2 which don't sit too well with us) .

Of course Rain Industries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.