A simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks wisely, you can make superior returns. For example, Sungei Bagan Rubber Company (Malaya) Berhad (KLSE: SBAGAN) shareholders have seen the share price increase by 14% in three years, well above the market decline (4.6%, excluding dividends). On the other hand, the returns have not been so good recently, with shareholders only 5.3%, including dividends.
Let’s take a look at the underlying fundamentals over the long term, and see if they have been consistent with shareholder returns.
Check out the latest analysis of Sungei Bagan Rubber Company (Malaya) Berhad
Sungei Bagan Rubber Company (Malaya) Berhad was not profitable in the last twelve months, it is unlikely that we will see a strong correlation between its share price and its earnings per share (EPS). Entry is probably our next best option. When a company is not making profits, we generally expect to see good revenue growth. It is because a rapid growth of revenues can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years Sungei Bagan Rubber Company (Malaya) Berhad has grown its revenue at 41% annually. That’s way above most pre-profit companies. While the compounded gain of 5% per year over three years is pretty good, you could argue that it doesn’t fully reflect the strong revenue growth. If that’s the case, now might be the time to take a closer look at Sungei Bagan Rubber Company (Malaya) Berhad. A window of opportunity can reveal over time if the business can tend to profitability.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how their budget has strengthened (or weakened) over time in it free interactive graphics.
And Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and the stock price return. The TSR is a yield calculation that contains the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any capital growth discounts and spin-offs. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. In the case of Sungei Bagan Rubber Company (Malaya) Berhad, it has a TSR of 20% for the last 3 years. That exceeds its share price performance that we mentioned earlier. And no prizes for guessing that dividend payments largely explain the divergence!
A different perspective
We are pleased to inform that the shareholders of Sungei Bagan Rubber Company (Malaya) Berhad received a total shareholder return of 5.3% in one year. Of course, this includes the dividend. That’s better than the 3% annualized return over half a decade, implying that the company has been doing better recently. Since the momentum of the share price remains strong, it might be worth looking more closely at the stock, so as not to miss an opportunity. It is always interesting to track long-term stock price performance. But to understand Sungei Bagan Rubber Company (Malaya) Berhad better, we need to consider many other factors. To this end, you must be aware of the 2 warning signs we spotted with Sungei Bagan Rubber Company (Malaya) Berhad .
We will like Sungei Bagan Rubber Company (Malaya) Berhad better if we see some big insider buying. While we wait, check this out free list of growing companies with a considerable, recent, insider purchase.
Please note, the market returns mentioned in this article reflect the weighted average market returns of the shares currently trading on MY exchanges.
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This Simply Wall St article 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 goals, or your financial situation. We aim to deliver focused long-term analysis driven by fundamental data. Note that our analysis can not factor in the latest announcements of companies sensitive to price or quality material. Simply Wall St has no position in any of the stocks mentioned.
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