Did You Miss India Motor Parts & Accessories' (NSE:IMPAL) 53% Share Price Gain?

On average, over time, stock markets tend to rise higher. This makes investing attractive. But if when you choose to buy stocks, some of them will be below average performers. Over the last year the India Motor Parts & Accessories Limited (NSE:IMPAL) share price is up 53%, but that's less than the broader market return. The longer term returns have not been as good, with the stock price only 0.8% higher than it was three years ago.

View our latest analysis for India Motor Parts & Accessories

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 last twelve months, India Motor Parts & Accessories actually shrank its EPS by 6.4%.

This means it's unlikely the market is judging the company based on earnings growth. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We are skeptical of the suggestion that the 1.4% dividend yield would entice buyers to the stock. Unfortunately India Motor Parts & Accessories' fell 10% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling India Motor Parts & Accessories stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

India Motor Parts & Accessories shareholders are up 53% for the year (even including dividends). But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 10% per year over five year. It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand India Motor Parts & Accessories better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for India Motor Parts & Accessories you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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