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Oct 30, 2023

Optimism for Paradeep Phosphates (NSE:PARADEEP) has grown this past week, despite one

Stock Analysis The simplest way to invest in stocks is to buy exchange traded

Stock Analysis

The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the Paradeep Phosphates Limited (NSE:PARADEEP) share price is up 37% in the last 1 year, clearly besting the market return of around 10% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Paradeep Phosphates hasn't been listed for long, so it's still not clear if it is a long term winner.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

Check out our latest analysis for Paradeep Phosphates

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over the last twelve months, Paradeep Phosphates actually shrank its EPS by 44%.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 0.9% dividend yield is doing much to support the share price. However the year on year revenue growth of 70% would help. We do see some companies suppress earnings in order to accelerate revenue growth.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

It's nice to see that Paradeep Phosphates shareholders have gained 37% over the last year, including dividends. The more recent returns haven't been as impressive as the longer term returns, coming in at just 6.6%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Paradeep Phosphates better, we need to consider many other factors. Take risks, for example - Paradeep Phosphates has 4 warning signs (and 2 which are a bit concerning) we think you should know about.

But note: Paradeep Phosphates may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian exchanges.

Find out whether Paradeep Phosphates is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Paradeep Phosphates Limited engages in manufacturing, trading, distribution, and sale of complex fertilizers in India.

Imperfect balance sheet unattractive dividend payer.