Shareholders might be concerned that the Bata India Limited (NSE: BATAINDIA) share price down 15% in the past month. But over five years, the returns have been remarkably good. In fact, during that time, the stock price climbed 326%. Impressive! We can probably expect the recent fall after such a steep rise. Of course, what matters most is whether the business can improve sustainably, thus justifying a higher price.

Given that long-term performance has been good but there has been a recent 7.2% pullback, let’s check if the fundamentals match the stock price.

See our latest analysis for Bata India

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly responsive dynamic systems and investors are not always rational. By comparing earnings per share (EPS) and changes in stock prices over time, we can get a sense of how investors’ attitudes towards a company have changed over time.

Bata India’s earnings per share are down 32% per year, despite a strong five-year share price performance.

This means that the market is unlikely to judge the company based on earnings growth. Since earnings per share don’t seem to match the share price, we’ll look at other metrics instead.

We doubt the modest 0.2% dividend yield will attract many buyers to the stock. The reduction in income per year is not positive. So it seems that there is a need to take a closer look at earnings and income trends to see how they might influence the stock price.

The graph below illustrates the evolution of earnings and income over time (reveal the exact values ​​by clicking on the image).

NSEI: BATAINDIA Profit and Revenue Growth December 22, 2021

We know Bata India has improved its results lately, but what does the future hold? If you are planning to buy or sell Bata India shares, you should check this out free report showing analysts’ earnings forecasts.

What about dividends?

In addition to measuring stock price performance, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. As it turns out, Bata India’s TSR over the past 5 years was 335%, which exceeds the share price return mentioned earlier. And there’s no price guessing that dividend payments largely explain the discrepancy!

A different perspective

Bata India shareholders are up 20% over the year (including dividends). But this yield is lower than the market. This is probably a good sign that the company has an even better long-term performance history, having provided shareholders with an annual TSR of 34% over five years. It may well be that this is a company worth watching, given the consistently positive reception over time from the market. Shareholders may want to take a look at this detailed historical graph of past earnings, income and cash flow.

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 that currently trade 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 any stock 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.