The truth is, if you invest long enough, you’re going to end up with losing stocks. But the long-term shareholders of India Tourism Finance Corporation Limited (NSE:TFCILTD) have had an unfortunate run for the past three years. Unfortunately, they had to deal with a 59% drop in share price during this period. And newer buyers are also struggling, with a 40% drop last year. Moreover, it fell by 22% in about a quarter. It’s not much fun for the holders. But it could be linked to the weakness of the market, which fell by 10% over the same period.
After losing 13% last week, it’s worth looking at company fundamentals to see what we can infer from past performance.
Check out our latest analysis for Tourism Finance Corporation of India
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
Tourism Finance Corporation of India has seen its EPS decline at a compound rate of 4.0% per annum, over the past three years. This reduction in EPS is slower than the 26% annual reduction in share price. It is therefore likely that the drop in EPS disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 4.90.
The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).
Dive deeper into Tourism Finance Corporation of India’s key metrics by viewing this interactive graph of Tourism Finance Corporation of India earnings, revenue and cash flow.
What about dividends?
In addition to measuring share price performance, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. It turns out that the TSR of the Tourism Finance Corporation of India for the past 3 years was -57%, which exceeds the share price return mentioned earlier. The dividends paid by the company thus inflated the total return to shareholders.
A different perspective
We regret to report that Tourism Finance Corporation of India shareholders are down 39% for the year (even including dividends). Unfortunately, this is worse than the general market decline of 0.6%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Unfortunately, last year’s performance capped a bad run, with shareholders facing a total loss of 8% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Like risks, for example. Every business has them, and we’ve spotted 5 warning signs for Tourism Finance Corporation of India (of which 1 is significant!) that you should know.
For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on IN exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.