Dialog Group Berhad's (KLSE:DIALOG) earnings trajectory could turn positive as the stock advances 5.4% this past week

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Dialog Group Berhad (KLSE:DIALOG) share price dropped 56% over five years. That is extremely sub-optimal, to say the least. And it's not just long term holders hurting, because the stock is down 37% in the last year. More recently, the share price has dropped a further 8.7% in a month.

The recent uptick of 5.4% could be a positive sign of things to come, so let's take a look at historical fundamentals.

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There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

During the five years over which the share price declined, Dialog Group Berhad's earnings per share (EPS) dropped by 14% each year. This change in EPS is reasonably close to the 15% average annual decrease in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. So it's fair to say the share price has been responding to changes in EPS.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Dialog Group Berhad the TSR over the last 5 years was -52%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

While the broader market lost about 6.9% in the twelve months, Dialog Group Berhad shareholders did even worse, losing 36% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Dialog Group Berhad better, we need to consider many other factors. For instance, we've identified 2 warning signs for Dialog Group Berhad that 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.