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Dredging Corporation of India Shareholders In The Red Over Five Years Regardless Of Earnings Growth

Posted on January 2, 2023

Dredging Corporation of India Limited (NSE:DREDGECORP) shareholders will doubtless be very grateful to see the share price up 34% in the last quarter. But don’t envy holders — looking back over 5 years the returns have been really bad. Indeed, the share price is down 55% in the period. Some might say the recent bounce is to be expected after such a bad drop. But it could be that the fall was overdone.

On a more encouraging note the company has added ₹1.7b to its market cap in just the last 7 days, so let’s see if we can determine what’s driven the five-year loss for shareholders.

Check out our latest analysis for Dredging Corporation of India

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Dredging Corporation of India became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

Revenue is actually up 8.3% over the time period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

NSEI:DREDGECORP Earnings and Revenue Growth January 1st 2023

Take a more thorough look at Dredging Corporation of India’s financial health with this free report on its balance sheet.

A Different Perspective

It’s good to see that Dredging Corporation of India has rewarded shareholders with a total shareholder return of 23% in the last twelve months. That certainly beats the loss of about 9% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We’ve spotted 2 warning signs for Dredging Corporation of India you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).


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