Formosa Prosonic Industries Berhad (KLSE:FPI) Has Gifted Shareholders With A Fantastic 264% Total Return On Their Investment

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. One great example is Formosa Prosonic Industries Berhad (KLSE:FPI) which saw its share price drive 161% higher over five years. It's also good to see the share price up 53% over the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.

View our latest analysis for Formosa Prosonic Industries Berhad

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Formosa Prosonic Industries Berhad managed to grow its earnings per share at 46% a year. This EPS growth is higher than the 21% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.33.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

This free interactive report on Formosa Prosonic Industries Berhad's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. As it happens, Formosa Prosonic Industries Berhad's TSR for the last 5 years was 264%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Formosa Prosonic Industries Berhad shareholders have received a total shareholder return of 46% over the last year. That's including the dividend. That's better than the annualised return of 29% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Formosa Prosonic Industries Berhad has 2 warning signs we think you should be aware of.

Of course Formosa Prosonic Industries 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 MY exchanges.

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