Reflecting on AMMB Holdings Berhad's (KLSE:AMBANK) Share Price Returns Over The Last Five Years

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in AMMB Holdings Berhad (KLSE:AMBANK), since the last five years saw the share price fall 35%. The falls have accelerated recently, with the share price down 17% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

See our latest analysis for AMMB Holdings Berhad

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years over which the share price declined, AMMB Holdings Berhad's earnings per share (EPS) dropped by 6.3% each year. This reduction in EPS is less than the 8% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The low P/E ratio of 8.26 further reflects this reticence.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into AMMB Holdings Berhad's key metrics by checking this interactive graph of AMMB Holdings Berhad's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered AMMB Holdings Berhad's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for AMMB Holdings Berhad shareholders, and that cash payout explains why its total shareholder loss of 21%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Investors in AMMB Holdings Berhad had a tough year, with a total loss of 0.9%, against a market gain of about 31%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 4% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before deciding if you like the current share price, check how AMMB Holdings Berhad scores on these 3 valuation metrics.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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