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Neuland Laboratories Limited (NSE:NEULANDLAB) shareholders might be concerned after seeing the share price drop 19% in the last quarter. Looking further back, the stock has generated good profits over five years. It has returned a market beating 69% in that time.
View our latest analysis for Neuland Laboratories
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Neuland Laboratories's earnings per share are down 17% per year, despite strong share price performance over five years. Essentially, it doesn't seem likely that investors are focused on EPS. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.
We doubt the modest 0.2% dividend yield is attracting many buyers to the stock. In contrast revenue growth of 6.7% per year is probably viewed as evidence that Neuland Laboratories is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
We know that Neuland Laboratories has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Neuland Laboratories in this interactive graph of future profit estimates.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Neuland Laboratories, it has a TSR of 78% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While the broader market gained around 0.6% in the last year, Neuland Laboratories shareholders lost 20% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 12%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Is Neuland Laboratories cheap compared to other companies? These 3 valuation measures might help you decide.