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When we invest, we typically look for stocks that outperform the market average. And while active stock selection involves risk (requiring diversification), it can also yield excess returns.For example, in the long run United Plantation Berhad (KLSE:UTDPLT) shareholders have enjoyed a 77% share price increase over the past five years, significantly outpacing the market’s decline of around 1.4% (not including dividends). However, recent gains have been less impressive, with the share price returning just 62% in the last year, including dividends.
With that in mind, it’s worth checking whether a company’s underlying fundamentals are driving its long-term performance, or if there are any discrepancies.
Check out our latest analysis for United Plantations Berhad.
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that overreact and that investors are not always rational. One way he looks at how market sentiment has changed over time is to look at the interaction between a company’s share price and his earnings per share (EPS).
United Plantations Berhad has managed to grow its earnings per share at 14% per year over five years. Therefore, the EPS growth rate is quite close to the annualized share price increase of 12% per year. This shows that investor sentiment toward the company has not changed significantly. In fact, share prices seem to be responding to EPS.
The company’s earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
We know that United Plantations Berhad has improved its earnings lately, but will its earnings grow? Find out if analysts think United Plantations Berhad will grow its earnings in the future.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. For United Plantations Berhad, the TSR for the last 5 years is 155%. This exceeds the stock return mentioned earlier. This is primarily due to dividend payments.
different perspective
We’re pleased to report that United Plantations Berhad shareholders received a total shareholder return of 62% over one year. That includes dividends. The stock appears to have performed better of late, as the 1-year TSR is better than his 5-year TSR (the latter coming in at 21% per annum). Optimists might think that the recent improvement in TSR indicates that the business itself is improving over time. I think it’s very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. For example, consider the ever-present fear of investment risk. We’ve identified 1 warning sign If you are considering partnering with United Plantations Berhad, understanding them should be part of your investment process.
of course, You may find a great investment by looking elsewhere. So take a look at this free A list of companies with expected revenue growth.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
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