Stock Analysis

Investors one-year returns in Oriental Holdings Berhad (KLSE:ORIENT) have grown faster than the company's underlying earnings growth

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KLSE:ORIENT
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Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Oriental Holdings Berhad (KLSE:ORIENT) share price is up 30% in the last 1 year, clearly besting the market decline of around 12% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Having said that, the longer term returns aren't so impressive, with stock gaining just 2.0% in three years.

While this past week has detracted from the company's one-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Though if you're not interested in researching what drove ORIENT's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Oriental Holdings Berhad was able to grow EPS by 109% in the last twelve months. It's fair to say that the share price gain of 30% did not keep pace with the EPS growth. So it seems like the market has cooled on Oriental Holdings Berhad, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.24.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
KLSE:ORIENT Earnings Per Share Growth September 30th 2022

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Oriental Holdings Berhad's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Oriental Holdings Berhad, it has a TSR of 39% for the last 1 year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Oriental Holdings Berhad shareholders have received a total shareholder return of 39% over the last year. And that does include the dividend. That's better than the annualised return of 6% 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. It's always interesting to track share price performance over the longer term. But to understand Oriental Holdings Berhad better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Oriental Holdings Berhad you should be aware of, and 1 of them shouldn't be ignored.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

Valuation is complex, but we're helping make it simple.

Find out whether Oriental Holdings Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About KLSE:ORIENT

Oriental Holdings Berhad

Oriental Holdings Berhad, an investment holding company, engages in automotive business.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth0
Past Performance4
Financial Health6
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet with proven track record and pays a dividend.