1 day Ago By Simply Wall St.
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can more than 100%. For instance the ( ) share price is 169% higher than it was three years ago.
That sort of return is as solid as granite. Also pleasing for shareholders was the 13% gain in the last three months. After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
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. During three years of share price growth, Sunway Construction Group Berhad achieved compound earnings per share growth of 23% per year.
This EPS growth is lower than the 39% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did three years ago. It's not unusual to see the market 're-rate' a stock, after a few years of growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image). We know that Sunway Construction Group Berhad has improved its bottom line lately, but is it going to grow revenue? This should help you figure out if the EPS growth can be sustained. As well as measuring the share price return, investors should also consider the total shareholder return (TSR).
The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Sunway Construction Group Berhad's TSR for the last 3 years was 196%, which exceeds the share price return mentioned earlier.
And there's no prize for guessing that the dividend payments largely explain the divergence! We're pleased to report that Sunway Construction Group Berhad shareholders have received a total shareholder return of 128% over one year. Of course, that includes the dividend. That's better than the annualised return of 19% over half a decade, implying that the company is doing better recently.
Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified that you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this.
