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It was not the best quarter for Reliance Infrastructure Limited (NSE:RELINFRA) shareholders, as the share price fell 17% during that time. But that doesn’t change the fact that returns over the last three years have been very strong. The share price has marched upwards during that time and is now 114% higher than it was. For some, the recent pullback in the share price would not be surprising after such a strong performance. Only time will tell if there is still too much optimism currently reflected in the share price.
Based on the solid 7-day performance, let’s examine what role the company’s fundamentals have played in delivering long-term shareholder returns.
Check out our latest analysis for Reliance Infrastructure
In his essay Graham-and-Doddsville Super Investors Warren Buffett described how stock prices do not always rationally reflect the value of a company. By comparing earnings per share (EPS) and share price changes over time, we can get a sense of how investor attitudes toward a company have changed over time.
Over three years of rising share price, Reliance Infrastructure has gone from loss-making to profitability. Given the importance of this milestone, it is not overly surprising that the share price has risen strongly.
The graph below shows how EPS has changed over time (find out the exact values by clicking on the image).
It might be worth looking at ours free Reliance Infrastructure’s earnings, revenue and cash flow statement.
A different perspective
It is good to see that Reliance Infrastructure shareholders have received a total shareholder return of 25% over the past year. That certainly beats the loss of about 12% per year over the last half decade. We generally place more weight on long-term performance over the short-term, but the recent improvement could signal a (positive) turning point in the business. It’s always interesting to track stock price performance over the long term. But to better understand Reliance Infrastructure, we have to consider many other factors. Take risks, for example – Reliance Infrastructure has 2 warning signs (and 1 which is kind of embarrassing) we think you should know.
If you like buying stocks along with management, then you might like this free list of companies. (Hint: insiders bought them).
Note that the market returns listed in this article reflect the market-weighted average returns of stocks currently trading on IN exchanges.
Valuation is complex, but we help make it simple.
Find out if Reliance Infrastructure is potentially overstated or understated by checking our comprehensive analysis, which includes fair value estimates, risks and caveats, dividends, insider transactions and financial condition.
Check out the free analysis
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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 an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simpli Wall St has no position in any of the stocks mentioned.
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