HCL Infosystems (NSE:HCL-INSYS) shareholder returns have been decent, earning 85% in 3 years

Investors can buy low cost index fund if they want to receive the average market return. But in any diversified portfolio of stocks, you'll see some that fall short of the average. That's what has happened with the HCL Infosystems Limited (NSE:HCL-INSYS) share price. It's up 85% over three years, but that is below the market return. Zooming in, the stock is up just 1.5% in the last year.

Since the stock has added ₹1.0b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for HCL Infosystems

HCL Infosystems wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

HCL Infosystems actually saw its revenue drop by 114% per year over three years. The falling revenue is arguably somewhat reflected in the lacklustre return of 23% per year over three years, which falls short of the market return. As a general rule we don't like it when a loss-making company isn't even growing revenue.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling HCL Infosystems stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

HCL Infosystems shareholders gained a total return of 1.5% during the year. Unfortunately this falls short of the market return. But at least that's still a gain! Over five years the TSR has been a reduction of 9% per year, over five years. So this might be a sign the business has turned its fortunes around. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for HCL Infosystems you should be aware of, and 1 of them is a bit unpleasant.

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 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.