Hextar Global Berhad (KLSE:HEXTAR) investors are up 10% in the past week, but earnings have declined over the last year

By
Simply Wall St
Published
February 08, 2022
KLSE:HEXTAR
Source: Shutterstock

Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Hextar Global Berhad (KLSE:HEXTAR) share price has soared 196% in the last 1 year. Most would be very happy with that, especially in just one year! In more good news, the share price has risen 18% in thirty days. We'll need to follow Hextar Global Berhad for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

See our latest analysis for Hextar Global Berhad

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Over the last twelve months, Hextar Global Berhad actually shrank its EPS by 10%.

So we don't think that investors are paying too much attention to EPS. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

We doubt the modest 1.1% dividend yield is doing much to support the share price. We think that the revenue growth of 7.1% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
KLSE:HEXTAR Earnings and Revenue Growth February 8th 2022

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

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. In the case of Hextar Global Berhad, it has a TSR of 200% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Hextar Global Berhad shareholders have gained 200% over the last year, including dividends. That's better than the more recent three month gain of 12%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). 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. To that end, you should learn about the 2 warning signs we've spotted with Hextar Global Berhad (including 1 which is a bit unpleasant) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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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