AFFIN Bank Berhad's (KLSE:AFFIN) Stock Price Has Reduced 27% In The Past Three Years

While it may not be enough for some shareholders, we think it is good to see the AFFIN Bank Berhad (KLSE:AFFIN) share price up 18% in a single quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 27% in the last three years, falling well short of the market return.

Check out our latest analysis for AFFIN Bank Berhad

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.

AFFIN Bank Berhad saw its EPS decline at a compound rate of 7.4% per year, over the last three years. This reduction in EPS is slower than the 10% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 9.91.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of AFFIN Bank Berhad, it has a TSR of -22% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

AFFIN Bank Berhad shareholders are up 1.6% for the year (even including dividends). While you don't go broke making a profit, this return was actually lower than the average market return of about 8.5%. On the bright side, that's certainly better than the yearly loss of about 7% endured over the last three years, implying that the company is doing better recently. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand AFFIN Bank Berhad better, we need to consider many other factors. Take risks, for example - AFFIN Bank Berhad has 3 warning signs we think you should be aware of.

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

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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