Earnings grew faster than the impressive 115% return delivered to UWC Berhad (KLSE:UWC) shareholders over the last year

Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example UWC Berhad (KLSE:UWC). Its share price is already up an impressive 115% in the last twelve months. It's also good to see the share price up 88% over the last quarter. The longer term returns have not been as good, with the stock price only 12% higher than it was three years ago.

In light of the stock dropping 5.3% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

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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).

UWC Berhad was able to grow EPS by 161% in the last twelve months. It's fair to say that the share price gain of 115% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about UWC Berhad as it was before. This could be an opportunity. Of course, with a P/E ratio of 111.10, the market remains optimistic.

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

We know that UWC Berhad has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

It's good to see that UWC Berhad has rewarded shareholders with a total shareholder return of 115% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4% 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. 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. Case in point: We've spotted 1 warning sign for UWC 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 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.