Frontken Corporation Berhad's (KLSE:FRONTKN) five-year earnings growth trails the 20% YoY shareholder returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Frontken Corporation Berhad (KLSE:FRONTKN) which saw its share price drive 134% higher over five years. It's even up 4.8% in the last week. But this might be partly because the broader market had a good week last week, gaining 1.9%.

Since the stock has added RM285m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Frontken Corporation Berhad

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Over half a decade, Frontken Corporation Berhad managed to grow its earnings per share at 13% a year. This EPS growth is lower than the 19% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 48.67.

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

We know that Frontken Corporation Berhad has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of Frontken Corporation Berhad, it has a TSR of 148% for the last 5 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 good to see that Frontken Corporation Berhad has rewarded shareholders with a total shareholder return of 14% in the last twelve months. Of course, that includes the dividend. However, that falls short of the 20% TSR per annum it has made for shareholders, each year, over five years. Before forming an opinion on Frontken Corporation Berhad you might want to consider these 3 valuation metrics.

Of course Frontken Corporation Berhad may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.