SAR Televenture's (NSE:SARTELE one-year decrease in earnings delivers investors with a 0.08% loss

The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by SAR Televenture Limited (NSE:SARTELE) shareholders over the last year, as the share price declined 13%. That falls noticeably short of the market return of around 12%. Because SAR Televenture hasn't been listed for many years, the market is still learning about how the business performs. The share price has dropped 32% in three months.

After losing 17% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for SAR Televenture

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 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.

Unfortunately SAR Televenture reported an EPS drop of 12% for the last year. We note that the 13% share price drop is very close to the EPS drop. So it seems that the market sentiment has not changed much, despite the weak results. Instead, the change in the share price seems to reduction in earnings per share, alone.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between SAR Televenture's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that SAR Televenture's TSR, at -0.08% is higher than its share price return of -13%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

Given that the market gained 12% in the last year, SAR Televenture shareholders might be miffed that they lost 0.08%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's worth noting that the last three months did the real damage, with a 32% decline. So it seems like some holders have been dumping the stock of late - and that's not bullish. It's always interesting to track share price performance over the longer term. But to understand SAR Televenture better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with SAR Televenture (including 2 which don't sit too well with us) .

Of course SAR Televenture may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.