If You Had Bought Petron Malaysia Refining & Marketing Bhd's (KLSE:PETRONM) Shares Three Years Ago You Would Be Down 67%

Petron Malaysia Refining & Marketing Bhd (KLSE:PETRONM) shareholders will doubtless be very grateful to see the share price up 35% in the last month. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 67%. Some might say the recent bounce is to be expected after such a bad drop. Perhaps the company has turned over a new leaf.

View our latest analysis for Petron Malaysia Refining & Marketing Bhd

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the three years that the share price declined, Petron Malaysia Refining & Marketing Bhd's earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

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

Dive deeper into Petron Malaysia Refining & Marketing Bhd's key metrics by checking this interactive graph of Petron Malaysia Refining & Marketing Bhd's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Petron Malaysia Refining & Marketing Bhd, it has a TSR of -64% for the last 3 years. 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

Petron Malaysia Refining & Marketing Bhd shareholders are down 18% for the year (even including dividends), but the market itself is up 8.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Petron Malaysia Refining & Marketing Bhd better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Petron Malaysia Refining & Marketing Bhd (at least 1 which is concerning) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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This article by Simply Wall St is general in nature. 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.
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