If You Had Bought Kossan Rubber Industries Bhd (KLSE:KOSSAN) Stock Three Years Ago, You Could Pocket A 117% Gain Today

Some Kossan Rubber Industries Bhd (KLSE:KOSSAN) shareholders are probably rather concerned to see the share price fall 44% over the last three months. In contrast, the return over three years has been impressive. In three years the stock price has launched 117% higher: a great result. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.

See our latest analysis for Kossan Rubber Industries 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. 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.

During three years of share price growth, Kossan Rubber Industries Bhd achieved compound earnings per share growth of 50% per year. This EPS growth is higher than the 29% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Kossan Rubber Industries Bhd has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Kossan Rubber Industries Bhd's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Kossan Rubber Industries Bhd's TSR for the last 3 years was 126%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Kossan Rubber Industries Bhd shareholders have received a total shareholder return of 115% over one year. Of course, that includes the dividend. That's better than the annualised return of 17% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Kossan Rubber Industries Bhd better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Kossan Rubber Industries Bhd (including 1 which makes us a bit uncomfortable) .

But note: Kossan Rubber Industries Bhd 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 MY exchanges.

If you decide to trade Kossan Rubber Industries Bhd, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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