In This Article:
Shiva Mills Limited (NSE:SHIVAMILLS) shareholders should be happy to see the share price up 15% in the last month. But that doesn't change the reality of under-performance over the last twelve months. In fact, the price has declined 35% in a year, falling short of the returns you could get by investing in an index fund.
View our latest analysis for Shiva Mills
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the unfortunate twelve months during which the Shiva Mills share price fell, it actually saw its earnings per share (EPS) improve by 3.7%. It's quite possible that 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, last year. But looking to other metrics might better explain the share price change.
We don't see any weakness in the Shiva Mills's dividend so the steady payout can't really explain the share price drop. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Of course, it could simply be that it simply fell short of the market consensus expectations.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Shiva Mills's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Shiva Mills's TSR for the last year was -33%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Given that the market gained 8.6% in the last year, Shiva Mills shareholders might be miffed that they lost 33% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 7.0% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Before forming an opinion on Shiva Mills you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.