Whereas D-Link (India) Limited (NSE:DLINKINDIA) Shareholders are likely generally happy the stock hasn’t had a particularly good run recently, with the stock price dropping 19% in the last quarter. On the other hand, the stock has performed reasonably well over three years. After all, the stock has outperformed the market (45%) over this period, over which it has gained 47%.
Although the stock has fallen 11% this week, it is worth focusing on the long term and seeing if historical stock returns have been driven by underlying fundamentals.
See our latest analysis for D-Link (India)
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that are too reactive and that investors are not always rational. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
D-Link (India) was able to increase its EPS by 17% per year over three years, driving up the share price. This EPS growth is greater than the average annual share price increase of 14%. We could therefore reasonably conclude that the market has cooled down on the stock. We think the low P/E ratio of 9.81 also reflects the negative sentiment around the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see more details).
Dive deeper into key D-Link (India) metrics by viewing this interactive chart of D-Link (India) earnings, revenue and cash flow.
What about dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. Note that for D-Link (India) the TSR over the past 3 years was 53%, which is better than the stock price return mentioned above. This is largely the result of its dividend payments!
A different perspective
We regret to report that D-Link (India) shareholders are down 6.2% for the year (even including dividends). Unfortunately, this is worse than the broader market decline of 0.04%. That said, it is inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the positive side, long-term shareholders have made money, with a gain of 4% per year over half a decade. If fundamentals continue to point to sustainable long-term growth, the current sell-off could be an opportunity to consider. It is always interesting to follow the evolution of the share price over the long term. But to better understand D-Link (India), we need to consider many other factors. For example, we have identified 3 warning signs for D-Link (India) of which you should be aware.
We’ll like D-Link (India) better if we see big insider buying. In the meantime, watch this free list of growing companies with significant and recent insider buying.
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.