In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by V.S.T. Tillers Tractors Limited (NSE:VSTTILLERS) shareholders over the last year, as the share price declined 51%. That contrasts poorly with the market return of 1.7%. Notably, shareholders had a tough run over the longer term, too, with a drop of 31% in the last three years.
View our latest analysis for V.S.T. Tillers Tractors
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 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.
Unhappily, V.S.T. Tillers Tractors had to report a 59% decline in EPS over the last year. We note that the 51% share price drop is very close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Instead, the change in the share price seems to reduction in earnings per share, alone.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on V.S.T. Tillers Tractors's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between V.S.T. Tillers Tractors's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for V.S.T. Tillers Tractors shareholders, and that cash payout explains why its total shareholder loss of 49%, over the last year, isn't as bad as the share price return.
A Different Perspective
V.S.T. Tillers Tractors shareholders are down 49% for the year (even including dividends), but the market itself is up 1.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5.7% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Is V.S.T. Tillers Tractors cheap compared to other companies? These 3 valuation measures might help you decide.