If You Had Bought Sarawak Oil Palms Berhad's (KLSE:SOP) Shares Five Years Ago You Would Be Down 15%

For many, the main point of investing is to generate higher returns than the overall market. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Sarawak Oil Palms Berhad (KLSE:SOP) shareholders for doubting their decision to hold, with the stock down 15% over a half decade. Furthermore, it's down 10% in about a quarter. That's not much fun for holders. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Check out our latest analysis for Sarawak Oil Palms 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.

During the unfortunate half decade during which the share price slipped, Sarawak Oil Palms Berhad actually saw its earnings per share (EPS) improve by 13% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

Generally speaking we'd expect to see stronger share price increases on the back of sustained EPS growth, but other metrics may hold a clue to why the share price performance is relatively modest.

We don't think that the 1.4% is big factor in the share price, since it's quite small, as dividends go. It could be that the revenue decline of 9.9% per year is viewed as evidence that Sarawak Oil Palms Berhad is shrinking. This has probably encouraged some shareholders to sell down the stock.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We know that Sarawak Oil Palms Berhad has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Sarawak Oil Palms Berhad in this interactive graph of future profit estimates.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Sarawak Oil Palms Berhad the TSR over the last 5 years was -2.4%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Sarawak Oil Palms Berhad shareholders have received returns of 15% over twelve months (even including dividends), which isn't far from the general market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 0.5% over the last five years. While 'turnarounds seldom turn' there are green shoots for Sarawak Oil Palms Berhad. 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 2 warning signs for Sarawak Oil Palms Berhad (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

We will like Sarawak Oil Palms Berhad better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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