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Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Mishra Dhatu Nigam Limited (NSE:MIDHANI) share price slid 16% over twelve months. That contrasts poorly with the market return of -1.3%. Mishra Dhatu Nigam may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 10% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 4.1% decline in the broader market, throughout the period.
Check out our latest analysis for Mishra Dhatu Nigam
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Unhappily, Mishra Dhatu Nigam had to report a 0.5% decline in EPS over the last year. The share price decline of 16% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Mishra Dhatu Nigam's earnings, revenue and cash flow 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Mishra Dhatu Nigam's TSR for the last year was -14%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We doubt Mishra Dhatu Nigam shareholders are happy with the loss of 14% over twelve months (even including dividends). That falls short of the market, which lost 1.3%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 10%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Is Mishra Dhatu Nigam cheap compared to other companies? These 3 valuation measures might help you decide.