Stock Analysis

Would Shareholders Who Purchased D-Link (India)'s (NSE:DLINKINDIA) Stock Five Years Be Happy With The Share price Today?

NSEI:DLINKINDIA
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D-Link (India) Limited (NSE:DLINKINDIA) shareholders should be happy to see the share price up 15% in the last month. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 30%, which falls well short of the return you could get by buying an index fund.

See our latest analysis for D-Link (India)

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...' 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.

While the share price declined over five years, D-Link (India) actually managed to increase EPS by an average of 3.5% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Alternatively, growth expectations may have been unreasonable in the past.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, five years ago. Having said that, we might get a better idea of what's going on with the stock by looking at other metrics.

We don't think that the 1.3% is big factor in the share price, since it's quite small, as dividends go. In contrast to the share price, revenue has actually increased by a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

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

earnings-and-revenue-growth
NSEI:DLINKINDIA Earnings and Revenue Growth December 14th 2020

If you are thinking of buying or selling D-Link (India) stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, D-Link (India)'s TSR for the last 5 years was -27%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that D-Link (India) has rewarded shareholders with a total shareholder return of 25% in the last twelve months. That's including the dividend. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand D-Link (India) better, we need to consider many other factors. Take risks, for example - D-Link (India) has 2 warning signs we think you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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