The easiest way to invest in stocks is to buy exchange traded funds. But investors can increase returns by choosing market-leading companies in which to hold stocks. For example, the IndusInd Bank Limited The share price (NSE: INDUSINDBK) has risen 84% over the past year, clearly outpacing the market return by around 59% (excluding dividends). If he can maintain this outperformance over the long term, investors will do very well! On the flip side, longer-term shareholders have had a tougher race, with the stock falling 36% in three years.
Since it’s been a strong week for IndusInd Bank shareholders, let’s take a look at the trend in longer-term fundamentals.
Check out our latest review for IndusInd Bank
To quote Buffett, “Ships will sail around the world but the Flat Earth Society will thrive. There will continue to be wide spreads between price and value in the market … ‘An imperfect but straightforward way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (BPA) with the price movement action.
Over the past year, IndusInd Bank has seen its earnings per share drop by 10%.
So we don’t think investors are paying too much attention to BPAs. Therefore, it seems likely that investors will place more weight on measures other than BPA, for the time being.
We are skeptical of the suggestion that the 0.4% dividend yield would encourage buyers to buy the stock. Revenue has been fairly stable year over year, but perhaps a closer look at the data can explain the market optimism.
The graph below illustrates the evolution of earnings and income over time (reveal the exact values by clicking on the image).
The strength of the balance sheet is crucial. It might be worth taking a look at our free report on changes in their financial situation over time.
A different perspective
It is nice to see that IndusInd Bank shareholders have received a total shareholder return of 85% over the past year. This includes the dividend. There is no doubt that these recent returns are much better than the TSR’s loss of 1.1% per annum over five years. The long-term loss makes us cautious, but the short-term TSR gain certainly points to a brighter future. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To do this, you need to know the 3 warning signs we spotted with IndusInd Bank.
If you are like me then you not want to miss it free list of growing companies that insiders buy.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the 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 using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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