Did Homeritz Corporation Berhad's (KLSE:HOMERIZ) Share Price Deserve to Gain 25%?

While Homeritz Corporation Berhad (KLSE:HOMERIZ) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 19% in the last quarter. But that doesn't change the reality that over twelve months the stock has done really well. To wit, it had solidly beat the market, up 25%.

View our latest analysis for Homeritz Corporation Berhad

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

Over the last twelve months, Homeritz Corporation Berhad actually shrank its EPS by 9.2%.

Given the share price gain, we doubt the market is measuring progress with EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We doubt the modest 1.9% dividend yield is doing much to support the share price. We think that the revenue growth of 7.9% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Homeritz Corporation Berhad in this interactive graph of future profit estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Homeritz Corporation Berhad, it has a TSR of 28% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Homeritz Corporation Berhad has rewarded shareholders with a total shareholder return of 28% in the last twelve months. And that does include the dividend. That certainly beats the loss of about 0.5% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Homeritz Corporation Berhad better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Homeritz Corporation Berhad (of which 1 makes us a bit uncomfortable!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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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