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The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Munjal Showa Limited (NSE:MUNJALSHOW) have tasted that bitter downside in the last year, as the share price dropped 46%. That's well bellow the market return of -12%. We note that it has not been easy for shareholders over three years, either; the share price is down 43% in that time. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.
Check out our latest analysis for Munjal Showa
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).
Unhappily, Munjal Showa had to report a 21% decline in EPS over the last year. The share price decline of 46% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 7.88 also points to the negative market sentiment.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Munjal Showa's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Munjal Showa the TSR over the last year was -43%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While the broader market lost about 12% in the twelve months, Munjal Showa shareholders did even worse, losing 43% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7.2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Importantly, we haven't analysed Munjal Showa's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.