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Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by GIC Housing Finance Limited (NSE:GICHSGFIN) shareholders over the last year, as the share price declined 41%. That's disappointing when you consider the market returned -9.5%. Even if you look out three years, the returns are still disappointing, with the share price down (the share price is down 40%) in that time. The falls have accelerated recently, with the share price down 26% in the last three months.
Check out our latest analysis for GIC Housing Finance
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unhappily, GIC Housing Finance had to report a 27% decline in EPS over the last year. The share price decline of 41% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business. The less favorable sentiment is reflected in its current P/E ratio of 7.11.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worthwhile taking a look at our free report on GIC Housing Finance's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between GIC Housing Finance's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for GIC Housing Finance shareholders, and that cash payout explains why its total shareholder loss of 39%, over the last year, isn't as bad as the share price return.
A Different Perspective
We regret to report that GIC Housing Finance shareholders are down 39% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 9.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 4.0% per year over half a decade. 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. Importantly, we haven't analysed GIC Housing Finance's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.