Earnings growth outpaced the respectable 42% return delivered to Leong Hup International Berhad (KLSE:LHI) shareholders over the last year

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the Leong Hup International Berhad (KLSE:LHI) share price is 36% higher than it was a year ago, much better than the market return of around 14% (not including dividends) in the same period. So that should have shareholders smiling. However, the stock hasn't done so well in the longer term, with the stock only up 15% in three years.

Since the stock has added RM237m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Leong Hup International Berhad

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

Leong Hup International Berhad was able to grow EPS by 50% in the last twelve months. This EPS growth is significantly higher than the 36% increase in the share price. So it seems like the market has cooled on Leong Hup International Berhad, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.45.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Leong Hup International Berhad has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Leong Hup International Berhad will grow revenue in the future.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Leong Hup International Berhad the TSR over the last 1 year was 42%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Leong Hup International Berhad has rewarded shareholders with a total shareholder return of 42% in the last twelve months. Of course, that includes the dividend. That certainly beats the loss of about 2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Leong Hup International Berhad (1 is a bit unpleasant!) that you should be aware of before investing here.

But note: Leong Hup International Berhad may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.