Shareholders Of BP Plastics Holding Bhd (KLSE:BPPLAS) Must Be Happy With Their 72% Return

By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, BP Plastics Holding Bhd (KLSE:BPPLAS) shareholders have seen the share price rise 47% over three years, well in excess of the market decline (12%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 39% in the last year , including dividends .

See our latest analysis for BP Plastics Holding Bhd

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During three years of share price growth, BP Plastics Holding Bhd achieved compound earnings per share growth of 30% per year. This EPS growth is higher than the 14% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.03.

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

Dive deeper into BP Plastics Holding Bhd's key metrics by checking this interactive graph of BP Plastics Holding Bhd's earnings, revenue and cash flow.

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. As it happens, BP Plastics Holding Bhd's TSR for the last 3 years was 72%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that BP Plastics Holding Bhd has rewarded shareholders with a total shareholder return of 39% in the last twelve months. And that does include the dividend. That's better than the annualised return of 0.4% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Take risks, for example - BP Plastics Holding Bhd has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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