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The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Gokul Agro Resources Limited (NSE:GOKULAGRO) share price slid 46% over twelve months. That falls noticeably short of the market return of around -1.9%. At least the damage isn't so bad if you look at the last three years, since the stock is down 14% in that time. Shareholders have had an even rougher run lately, with the share price down 30% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
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See our latest analysis for Gokul Agro Resources
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 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, Gokul Agro Resources had to report a 29% decline in EPS over the last year. This reduction in EPS is not as bad as the 46% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The less favorable sentiment is reflected in its current P/E ratio of 11.46.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
This free interactive report on Gokul Agro Resources's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Gokul Agro Resources shareholders are down 46% for the year, falling short of the market return. Meanwhile, the broader market slid about 1.9%, likely weighing on the stock. The three-year loss of 5.0% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Is Gokul Agro Resources cheap compared to other companies? These 3 valuation measures might help you decide.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.