Investors five-year losses continue as Dutch Lady Milk Industries Berhad (KLSE:DLADY) dips a further 12% this week, earnings continue to decline

Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. To wit, the Dutch Lady Milk Industries Berhad (KLSE:DLADY) share price managed to fall 55% over five long years. We certainly feel for shareholders who bought near the top. Even worse, it's down 19% in about a month, which isn't fun at all. But this could be related to poor market conditions -- stocks are down 7.6% in the same time.

If the past week is anything to go by, investor sentiment for Dutch Lady Milk Industries Berhad isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Dutch Lady Milk Industries Berhad

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Looking back five years, both Dutch Lady Milk Industries Berhad's share price and EPS declined; the latter at a rate of 6.9% per year. This reduction in EPS is less than the 15% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Dutch Lady Milk Industries 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?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. In the case of Dutch Lady Milk Industries Berhad, it has a TSR of -51% 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

We're pleased to report that Dutch Lady Milk Industries Berhad shareholders have received a total shareholder return of 36% over one year. Of course, that includes the dividend. That certainly beats the loss of about 9% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Even so, be aware that Dutch Lady Milk Industries Berhad is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com