The five-year earnings decline is not helping Marathon Nextgen Realty's (NSE:MARATHON share price, as stock falls another 14% in past week

By
Simply Wall St
Published
February 25, 2022
NSEI:MARATHON
Source: Shutterstock

While it may not be enough for some shareholders, we think it is good to see the Marathon Nextgen Realty Limited (NSE:MARATHON) share price up 13% in a single quarter. But over the last half decade, the stock has not performed well. You would have done a lot better buying an index fund, since the stock has dropped 20% in that half decade.

After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for Marathon Nextgen Realty

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

During the five years over which the share price declined, Marathon Nextgen Realty's earnings per share (EPS) dropped by 36% each year. This fall in the EPS is worse than the 4% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around. With a P/E ratio of 55.12, it's fair to say the market sees a brighter future for the business.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
NSEI:MARATHON Earnings Per Share Growth February 25th 2022

This free interactive report on Marathon Nextgen Realty's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Marathon Nextgen Realty provided a TSR of 15% over the year. That's fairly close to the broader market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 3% over the last five years. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Marathon Nextgen Realty (of which 2 are potentially serious!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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