Stock Analysis

Would Shareholders Who Purchased CIMB Group Holdings Berhad's (KLSE:CIMB) Stock Three Years Be Happy With The Share price Today?

KLSE:CIMB
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CIMB Group Holdings Berhad (KLSE:CIMB) shareholders should be happy to see the share price up 30% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 37% in the last three years, falling well short of the market return.

View our latest analysis for CIMB Group Holdings Berhad

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

During the three years that the share price fell, CIMB Group Holdings Berhad's earnings per share (EPS) dropped by 27% each year. This fall in the EPS is worse than the 14% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.

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:CIMB Earnings Per Share Growth November 30th 2020

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

What about the Total Shareholder Return (TSR)?

We've already covered CIMB Group 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. Its history of dividend payouts mean that CIMB Group Holdings Berhad's TSR, which was a 29% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market gained around 6.9% in the last year, CIMB Group Holdings Berhad shareholders lost 24%. 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. Longer term investors wouldn't be so upset, since they would have made 1.5%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with CIMB Group Holdings Berhad .

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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