Hong Leong Financial Group Berhad's (KLSE:HLFG) five-year earnings growth trails the 4.6% YoY shareholder returns

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, long term Hong Leong Financial Group Berhad (KLSE:HLFG) shareholders have enjoyed a 12% share price rise over the last half decade, well in excess of the market return of around 9.4% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 0.7%, including dividends.

Since it's been a strong week for Hong Leong Financial Group Berhad shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Hong Leong Financial Group Berhad

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, Hong Leong Financial Group Berhad achieved compound earnings per share (EPS) growth of 9.5% per year. This EPS growth is higher than the 2% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.87.

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

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

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Hong Leong Financial Group Berhad's TSR for the last 5 years was 25%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Hong Leong Financial Group Berhad shareholders gained a total return of 0.7% during the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 5% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Before deciding if you like the current share price, check how Hong Leong Financial Group 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 Malaysian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.