Did You Miss Shriram Pistons & Rings’ (NSE:SHRIPISTON) 80% Share Price Gain?

We believe investing is smart because history shows that stock markets go higher in the long term. But if when you choose to buy stocks, some of them will be below average performers. Over the last year the Shriram Pistons & Rings Limited (NSE:SHRIPISTON) share price is up 80%, but that’s less than the broader market return. On the other hand, longer term shareholders have had a tougher run, with the stock falling 52% in three years.

View our latest analysis for Shriram Pistons & Rings

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year, Shriram Pistons & Rings actually saw its earnings per share drop 53%.

So we don’t think that investors are paying too much attention to EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We are skeptical of the suggestion that the 0.8% dividend yield would entice buyers to the stock. Unfortunately Shriram Pistons & Rings’ fell 21% over twelve months. So using a snapshot of key business metrics doesn’t give us a good picture of why the market is bidding up the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Shriram Pistons & Rings’ balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Shriram Pistons & Rings shareholders are up 81% for the year (even including dividends). While you don’t go broke making a profit, this return was actually lower than the average market return of about 93%. On the bright side, that’s certainly better than the yearly loss of about 14% endured over the last three years, implying that the company is doing better recently. We hope the turnaround in fortunes continues. It’s always interesting to track share price performance over the longer term. But to understand Shriram Pistons & Rings better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we’ve spotted with Shriram Pistons & Rings (including 1 which is potentially serious) .

But note: Shriram Pistons & Rings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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