If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Brookfield India Real Estate Trust (NSE: BIRET) share price is up 19% in the last 1 year, clearly besting the market decline of around 3.7% (not including dividends). So that should have shareholders smiling. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Since the long term performance has been good but there’s been a recent pullback of 3.9%, let’s check if the fundamentals match the share price.
Check out our latest analysis for Brookfield India Real Estate Trust
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in earnings per share (EPS) with the share price movement.
During the last year Brookfield India Real Estate Trust grew its earnings per share (EPS) by 48%. This EPS growth is significantly higher than the 19% increase in the share price. So it seems like the market has cooled on Brookfield India Real Estate Trust, despite the growth. Interesting.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Brookfield India Real Estate Trust has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Brookfield India Real Estate Trust, it has a TSR of 26% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Brookfield India Real Estate Trust shareholders should be happy with the total gain of 26% over the last twelve months, including dividends. And the share price momentum remains respectable, with a gain of 5.5% in the last three months. This suggests the company is continuing to win over new investors. It’s always interesting to track share price performance over the longer term. But to understand Brookfield India Real Estate Trust better, we need to consider many other factors. Consider for instance, the ever-present specter of investment risk. We’ve identified 1 warning sign with Brookfield India Real Estate Trust, and understanding them should be part of your investment process.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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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 into account 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.