It hasn't been the best quarter for DKSH Holdings (Malaysia) Berhad (KLSE:DKSH) shareholders, since the share price has fallen 14% in that time. But over three years, the returns would have left most investors smiling To wit, the share price did better than an index fund, climbing 77% during that period.
While the stock has fallen 12% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
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. 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).
DKSH Holdings (Malaysia) Berhad was able to grow its EPS at 27% per year over three years, sending the share price higher. This EPS growth is higher than the 21% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.44.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that DKSH Holdings (Malaysia) Berhad has improved its bottom line lately, but is it going to grow revenue? Check if analysts think DKSH Holdings (Malaysia) Berhad will grow revenue in the future.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of DKSH Holdings (Malaysia) Berhad, it has a TSR of 90% for the last 3 years. 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 DKSH Holdings (Malaysia) Berhad shareholders have received a total shareholder return of 47% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 0.6% per year), it would seem that the stock's performance has improved in recent times. 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 DKSH Holdings (Malaysia) Berhad better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for DKSH Holdings (Malaysia) Berhad 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. 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.