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If You Had Bought Advanced Enzyme Technologies (NSE:ADVENZYMES) Stock Three Years Ago, You'd Be Sitting On A 67% Loss, Today

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Simply Wall St
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Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Advanced Enzyme Technologies Limited (NSE:ADVENZYMES) have had an unfortunate run in the last three years. Unfortunately, they have held through a 67% decline in the share price in that time. On the other hand the share price has bounced 6.7% over the last week. But this could be related to the strong market, with stocks up around 3.3% in the same time.

Check out our latest analysis for Advanced Enzyme Technologies

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).

During the unfortunate three years of share price decline, Advanced Enzyme Technologies actually saw its earnings per share (EPS) improve by 9.2% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

The modest 0.4% dividend yield is unlikely to be guiding the market view of the stock. We note that, in three years, revenue has actually grown at a 12% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Advanced Enzyme Technologies further; while we may be missing something on this analysis, there might also be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NSEI:ADVENZYMES Income Statement, October 23rd 2019
NSEI:ADVENZYMES Income Statement, October 23rd 2019

We know that Advanced Enzyme Technologies has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Advanced Enzyme Technologies

A Different Perspective

Over the last year, Advanced Enzyme Technologies shareholders took a loss of 15% , including dividends . In contrast the market gained about 9.4%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn't pretty, with investment losses running at 31% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. Before forming an opinion on Advanced Enzyme Technologies you might want to consider these 3 valuation metrics.

Of course Advanced Enzyme Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.