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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by RPP Infra Projects Limited (NSE:RPPINFRA) shareholders over the last year, as the share price declined 49%. That's well bellow the market return of 3.0%. We note that it has not been easy for shareholders over three years, either; the share price is down 36% in that time. Unfortunately the share price momentum is still quite negative, with prices down 20% in thirty days.
See our latest analysis for RPP Infra Projects
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 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.
Even though the RPP Infra Projects share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past. The divergence between the EPS and the share price is quite notable, during the year. So it's well worth checking out some other metrics, too.
With a low yield of 0.5% we doubt that the dividend influences the share price much. RPP Infra Projects's revenue is actually up 16% 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.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
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.
What about the Total Shareholder Return (TSR)?
We've already covered RPP Infra Projects's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that RPP Infra Projects's TSR, which was a 49% drop over the last year, was not as bad as the share price return.