In This Article:
Pokarna Limited (NSE:POKARNA) shareholders should be happy to see the share price up 12% in the last month. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 18% in the last three years, falling well short of the market return.
Check out our latest analysis for Pokarna
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).
Although the share price is down over three years, Pokarna actually managed to grow EPS by 23% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past. It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.
With a rather small yield of just 0.4% we doubt that the stock's share price is based on its dividend. Revenue is actually up 6.6% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Pokarna further; while we may be missing something on this analysis, there might also be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that Pokarna has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Pokarna
A Different Perspective
Pokarna shareholders are down 10% for the year (even including dividends) , falling short of the market return. Meanwhile, the broader market slid about 0.5%, likely weighing on the stock. Shareholders have lost 6.2% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. You could get a better understanding of Pokarna's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
But note: Pokarna may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).