60% Collapse in 1 Year
- Rohit Musale, CFA
- Jan 19
- 2 min read
Every trader must learn this lesson.
This is a weekly timeframe chart of Shakti Pumps.
The stock has collapsed 60% in 1 year.
Nothing in the stock market happens for no reason.
I am attaching the quarterly sales and EPS numbers here.
What do you see ?
In 5 quarters, the stock EPS growth has gone from 4 digits to 3 digits to 2 digits to 1 digit to finally negative growth.
Is it a coincidence that the stock is falling ?
Look at the sales numbers.
The sales growth too has gone from triple digits to double digits to single digits.
Declining sales growth.
Declining EPS growth.
Declining stock price.
Is this rocket science to learn ?
Next time you see a drop in the growth rate on this table in any stock, will you still choose to put your money on the line ?
Recently, Polycab broke its 10 week SMA and Sai Life entered its stop loss range in less than 10 days.
Do you know what was common between Polycab and Sai Life ?
Decline in EPS growth rate of latest quarter from previous quarter.
On the other hand, HindCopper went on to enter its target range.
Do you know, HindCopper had accelerating EPS growth, latest quarter ?
I hope you get my message.
A falling stock and deteriorating fundamentals: is not a coincidence.
Always pay attention to the fundamentals to understand the risk in your positions.
Quick note: There are exceptions ofcourse.
GMR Airports reported 8 straight quarters of negative EPS numbers and still shot up 400% in 3 years.
Exceptions in stock market are rare, not plenty.
Regards,
Rohit Musale, CFA
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