Reflecting on Perusahaan Sadur Timah Malaysia (Perstima) Berhad's(KLSE:PERSTIM) Total Shareholder Returns Over The Last Five Years

Perusahaan Sadur Timah Malaysia (Perstima) Berhad (KLSE:PERSTIM) shareholders should be happy to see the share price up 11% in the last month. But if you look at the last five years the returns have not been good. After all, the share price is down 33% in that time, significantly under-performing the market.

Check out our latest analysis for Perusahaan Sadur Timah Malaysia (Perstima) 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. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years over which the share price declined, Perusahaan Sadur Timah Malaysia (Perstima) Berhad's earnings per share (EPS) dropped by 6.9% each year. This change in EPS is reasonably close to the 8% average annual decrease in the share price. This suggests that market participants have not changed their view of the company all that much. So it's fair to say the share price has been responding to changes in EPS.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Perusahaan Sadur Timah Malaysia (Perstima) Berhad's earnings, revenue and cash flow.

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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Perusahaan Sadur Timah Malaysia (Perstima) Berhad's TSR for the last 5 years was -12%, 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

While the broader market gained around 3.7% in the last year, Perusahaan Sadur Timah Malaysia (Perstima) Berhad shareholders lost 10% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with Perusahaan Sadur Timah Malaysia (Perstima) Berhad (including 1 which is is significant) .

But note: Perusahaan Sadur Timah Malaysia (Perstima) Berhad 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.

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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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