Investors in Ramco Cements (NSE:RAMCOCEM) have seen returns of 16% over the past five years

The Ramco Cements Limited (NSE:RAMCOCEM) shareholders might be concerned after seeing the share price drop 18% in the last quarter. On the bright side the share price is up over the last half decade. Unfortunately its return of 14% is below the market return of 149%.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Ramco Cements

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).

Ramco Cements' earnings per share are down 10% per year, despite strong share price performance over five years.

Since the EPS are down strongly, it seems highly unlikely market participants are looking at EPS to value the company. The falling EPS doesn't correlate with the climbing share price, so it's worth taking a look at other metrics.

The modest 0.3% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 15% per year is probably viewed as evidence that Ramco Cements is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Ramco Cements is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Ramco Cements in this interactive graph of future profit estimates.

A Different Perspective

While it's certainly disappointing to see that Ramco Cements shares lost 1.0% throughout the year, that wasn't as bad as the market loss of 4.5%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 3% for each year. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Ramco Cements better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Ramco Cements (of which 1 is potentially serious!) you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.