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The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Rupa & Company Limited (NSE:RUPA) share price is down 36% in the last year. That's disappointing when you consider the market returned 2.3%. At least the damage isn't so bad if you look at the last three years, since the stock is down 2.2% in that time. Even worse, it's down 13% in about a month, which isn't fun at all. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
View our latest analysis for Rupa
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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unhappily, Rupa had to report a 14% decline in EPS over the last year. This reduction in EPS is not as bad as the 36% 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).
It might be well worthwhile taking a look at our free report on Rupa's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We've already covered Rupa'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. Rupa's TSR of was a loss of 35% for the year. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
While the broader market gained around 2.3% in the last year, Rupa shareholders lost 35% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 5.8% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Is Rupa cheap compared to other companies? These 3 valuation measures might help you decide.