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The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Premier Polyfilm Ltd. (NSE:PREMIERPOL) have tasted that bitter downside in the last year, as the share price dropped 37%. That's disappointing when you consider the market returned 2.7%. Longer term investors have fared much better, since the share price is up 29% in three years. On top of that, the share price has dropped a further 8.3% in a month.
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Check out our latest analysis for Premier Polyfilm
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Unfortunately Premier Polyfilm reported an EPS drop of 27% for the last year. This reduction in EPS is not as bad as the 37% share price fall. So it seems the market was too confident about the business, a year ago.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Premier Polyfilm's key metrics by checking this interactive graph of Premier Polyfilm's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We've already covered Premier Polyfilm's share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that Premier Polyfilm's TSR, which was a 36% drop over the last year, was not as bad as the share price return.
A Different Perspective
The last twelve months weren't great for Premier Polyfilm shares, which cost holders 36%, including dividends, while the market was up about 2.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 11% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. Is Premier Polyfilm cheap compared to other companies? These 3 valuation measures might help you decide.