Did Sarawak Plantation Berhad's (KLSE:SWKPLNT) Share Price Deserve to Gain 61%?

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Sarawak Plantation Berhad (KLSE:SWKPLNT) share price is 61% higher than it was a year ago, much better than the market return of around 35% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Looking back further, the stock price is 34% higher than it was three years ago.

Check out our latest analysis for Sarawak Plantation Berhad

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Sarawak Plantation Berhad was able to grow EPS by 192% in the last twelve months. It's fair to say that the share price gain of 61% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Sarawak Plantation Berhad as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.66.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that Sarawak Plantation Berhad has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Sarawak Plantation Berhad's financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Sarawak Plantation Berhad's TSR for the last year was 70%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Sarawak Plantation Berhad shareholders have received a total shareholder return of 70% over the last year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 Plantation Berhad (1 is potentially serious!) that you should be aware of before investing here.

We will like Sarawak Plantation 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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