Did Business Growth Power MGB Berhad's (KLSE:MGB) Share Price Gain of 119%?

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the MGB Berhad (KLSE:MGB) share price has soared 119% return in just a single year. It's also good to see the share price up 60% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. On the other hand, longer term shareholders have had a tougher run, with the stock falling 39% in three years.

View our latest analysis for MGB 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 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 the last year MGB Berhad grew its earnings per share (EPS) by 2.7%. This EPS growth is significantly lower than the 119% increase in the share price. This indicates that the market is now more optimistic about the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

A Different Perspective

It's nice to see that MGB Berhad shareholders have gained 119% (in total) over the last year. This recent result is much better than the 11% drop suffered by shareholders each year (on average) over the last three. It could well be that the business has turned around -- or else regained the confidence of investors. It's always interesting to track share price performance over the longer term. But to understand MGB Berhad better, we need to consider many other factors. For example, we've discovered 1 warning sign for MGB Berhad that you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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