Despite lower earnings than three years ago, Advanced Enzyme Technologies (NSE:ADVENZYMES) investors are up 67% since then – Simply Wall St
Stock Analysis
Advanced Enzyme Technologies Limited (NSE:ADVENZYMES) shareholders might be concerned after seeing the share price drop 11% in the last week. On the other hand the share price is higher than it was three years ago. Arguably you'd have been better off buying an index fund, because the gain of 65% in three years isn't amazing.
Since the long term performance has been good but there's been a recent pullback of 11%, let's check if the fundamentals match the share price.
See our latest analysis for Advanced Enzyme Technologies
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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last three years, Advanced Enzyme Technologies failed to grow earnings per share, which fell 4.7% (annualized).
Based on these numbers, we think that the decline in earnings per share may not be a good representation of how the business has changed over the years. 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.
The modest 0.4% dividend yield is unlikely to be propping up the share price. It may well be that Advanced Enzyme Technologies revenue growth rate of 8.1% over three years has convinced shareholders to believe in a brighter future. If the company is being managed for the long term good, today's shareholders might be right to hold on.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Advanced Enzyme Technologies' financial health with this free report on its balance sheet.
Investors in Advanced Enzyme Technologies had a tough year, with a total loss of 17% (including dividends), against a market gain of about 3.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.4% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Advanced Enzyme Technologies better, we need to consider many other factors. Even so, be aware that Advanced Enzyme Technologies is showing 1 warning sign in our investment analysis , you should know about…
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
Find out whether Advanced Enzyme Technologies 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.
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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 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.
Advanced Enzyme Technologies Limited researches and develops, manufactures, and markets enzymes and probiotics in India, the United States, Asia, Europe, and internationally.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Flawless balance sheet with moderate growth potential.
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