Shareholders of ES Ceramics Technology Berhad (KLSE:ESCERAM) Must Be Delighted With Their 700% Total Return

We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. You won't get it right every time, but when you do, the returns can be truly splendid. One such superstar is ES Ceramics Technology Berhad (KLSE:ESCERAM), which saw its share price soar 639% in three years. On top of that, the share price is up 68% in about a quarter.

Anyone who held for that rewarding ride would probably be keen to talk about it.

See our latest analysis for ES Ceramics Technology Berhad

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During three years of share price growth, ES Ceramics Technology Berhad achieved compound earnings per share growth of 31% per year. In comparison, the 95% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It's not unusual to see the market 're-rate' a stock, after a few years of growth. This optimism is also reflected in the fairly generous P/E ratio of 49.82.

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

Dive deeper into ES Ceramics Technology Berhad's key metrics by checking this interactive graph of ES Ceramics Technology 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. 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. We note that for ES Ceramics Technology Berhad the TSR over the last 3 years was 700%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that ES Ceramics Technology Berhad has rewarded shareholders with a total shareholder return of 514% in the last twelve months. And that does include the dividend. That's better than the annualised return of 30% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 4 warning signs for ES Ceramics Technology Berhad (1 can't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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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