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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in D. P. Abhushan Limited (NSE:DPABHUSHAN) have tasted that bitter downside in the last year, as the share price dropped 19%. That's well bellow the market return of 0.05%. D. P. Abhushan may have better days ahead, of course; we've only looked at a one year period. Unhappily, the share price slid 4.1% in the last week.

See our latest analysis for D. P. Abhushan

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During the unfortunate twelve months during which the D. P. Abhushan share price fell, it actually saw its earnings per share (EPS) improve by 15%. Of course, the situation might betray previous over-optimism about growth. It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.

D. P. Abhushan's revenue is actually up 13% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While D. P. Abhushan shareholders are down 19% for the year, the market itself is up 0.05%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 2.9%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before forming an opinion on D. P. Abhushan you might want to consider these 3 valuation metrics.