The Jagsonpal Pharmaceuticals (NSE:JAGSNPHARM) Share Price Is Down 39% So Some Shareholders Are Getting Worried
For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Jagsonpal Pharmaceuticals Limited (NSE:JAGSNPHARM) shareholders, since the share price is down 39% in the last three years, falling well short of the market return of around 17%. On top of that, the share price has dropped a further 14% in a month. However, we note the price may have been impacted by the broader market, which is down 8.3% in the same time period.
See our latest analysis for Jagsonpal Pharmaceuticals
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.
During five years of share price growth, Jagsonpal Pharmaceuticals moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.
With a rather small yield of just 1.1% we doubt that the stock's share price is based on its dividend. With revenue flat over three years, it seems unlikely that the share price is reflecting the top line. We're not entirely sure why the share price is dropped, but it does seem likely investors have become less optimistic about the business.
This free interactive report on Jagsonpal Pharmaceuticals's balance sheet strength is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Jagsonpal Pharmaceuticals's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Jagsonpal Pharmaceuticals's TSR, which was a 39% drop over the last 3 years, was not as bad as the share price return.
A Different Perspective
We regret to report that Jagsonpal Pharmaceuticals shareholders are down 19% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 11%. 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. On the bright side, long term shareholders have made money, with a gain of 0.4% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before spending more time on Jagsonpal Pharmaceuticals it might be wise to click here to see if insiders have been buying or selling shares.
We will like Jagsonpal Pharmaceuticals better if we see some big insider buys. While we wait, check out this free list of growing companies 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 IN exchanges.
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.
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. Thank you for reading.