Buying cheap index funds will get you average market returns. But if you invest in individual stocks, some may not work. For example, those The debt of Godrej Consumer Products Limited (NSE:GODREJCP)’s price return of 41% over the three-year period outperforms the stock market over the same period. Unfortunately, the share price is down 15% over the last 12 months.
Although Godrej Consumer Products has shed ₹28b from its stock market this week, let’s take a look at its long-term fundamentals and see if they have led to a comeback.
Choose a keyword other than Godrej Consumer Products
To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a measuring machine. By comparing earnings per share (EPS) and price changes over time, we can get a feel for how investor attitudes toward companies have evolved over time.
Over the past three years, Godrej Consumer Products has been unable to grow earnings per share, which fell 8.7% (yearly).
Therefore, we doubt that the market is looking to EPS as the chief arbiter of the company’s value. Therefore, we think it is worth considering other metrics.
It may be that Godrej Consumer Products’ revenue growth of 7.1% in three years has convinced shareholders that they believe the future is bright. In that case, the company may be sacrificing now per share to promote growth, but perhaps the owner’s faith will be rewarded in better days.
You can see below how earnings and revenue have changed over time (find out the exact values by clicking on the image).
It is good to see that there have been important purchases in the last three months. That’s right. On the other hand, we think that the income from the financial system is more valuable than that of the business. Therefore, it makes sense to check what analysts expect Godrej Consumer Products to earn in the future (expected earnings).
A different idea
Shares of Godrej Consumer Products are down 15% for the year, but the market itself is up 5.6%. However, keep in mind that even the best products will sometimes be on the market in twelve months. On the bright side, long-term shareholders have made money, earning 7% annually over half a decade. If fundamental data continues to show long-term sustainable growth, selling now may be an opportunity worth considering. It’s all well and good that investors are buying shares, but we recommend that you check here to see what prices investors are buying.
There are many other companies that have investors who buy shares. Maybe you will it is not want to lose this for free a list of young companies that buy from consumers.
Please note, the market returns quoted in this report reflect the weighted returns of the market currently trading in the IN exchange.
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This article from Simply Wall St is general in nature. We provide information based on historical data and research forecasts only using unbiased methods and our articles are not intended to be financial advice. It is not a recommendation to buy or sell any product, it does not protect your interests, or your financial situation. We aim to bring you long-term focused research from our data base. Note that our analysis may not include the most recent or influential industry rankings. Only Wall St has no position in any of the stocks mentioned.