Investors in Ujjivan Financial Services (NSE: UJJIVAN) from five years ago are still down 56%, even after gaining 14% last week

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Ujjivan Financial Services Limited (NSE: UJJIVAN) Shareholders should be happy to see the stock price rise 18% over the past month. But that doesn’t change the fact that returns over the past five years have been disappointing. Indeed, the share price is down 57% over the period. So we don’t know if the recent rebound is to be celebrated. But it could be that the fall was exaggerated.

As the stock rose 14% last week but long-term shareholders are still in the red, let’s see what the fundamentals can tell us.

See our latest review for Ujjivan Financial Services

While the markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just the underlying performance of the company. 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).

Over five years, Ujjivan Financial Services‘ earnings per share fell significantly, falling at a loss as the share price also fell. Since the company has fallen into a loss position, it is difficult to compare the change in EPS with the change in the share price. However, we can say that we expect the share price to decline in this scenario.

The image below shows how EPS has tracked over time (if you click on the image you can see more detail).

NSEI: UJJIVAN Growth in earnings per share October 30, 2021

It’s probably worth noting that CEOs are paid less than the median in companies of similar size. But while CEO compensation is still worth checking out, the really important question is whether the company can increase profits in the future. It might be worth taking a look at our free Ujjivan Financial Services earnings, revenue and cash flow report.

A different perspective

Investors in Ujjivan Financial Services had a difficult year, with a total loss of 15%, against a market gain of around 63%. Even good stock prices sometimes drop, but we want to see improvements in the fundamentals of a company, before we get too interested. Unfortunately, longer-term shareholders suffer more, given the 9% loss distributed over the past five years. We would need to see sustained improvements in key metrics before we can muster much enthusiasm. It is always interesting to follow the evolution of stock prices over the long term. But to understand Ujjivan Financial Services better, there are many other factors to consider. For example, we discovered 2 warning signs for Ujjivan Financial Services (1 is a bit nasty!) Which you should be aware of before investing here.

If you like to buy stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).

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

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 documents. Simply Wall St has no position in any of the stocks mentioned.

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