Matrix Concepts Holdings Berhad's (KLSE:MATRIX) Stock Price Has Reduced 21% In The Past Three Years

For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Matrix Concepts Holdings Berhad (KLSE:MATRIX) shareholders, since the share price is down 21% in the last three years, falling well short of the market decline of around 0.9%. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 8.1%. But this could be related to good market conditions, with stocks up around 3.9% during the period.

See our latest analysis for Matrix Concepts Holdings 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).

Although the share price is down over three years, Matrix Concepts Holdings Berhad actually managed to grow EPS by 5.8% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. It's good to see that Matrix Concepts Holdings Berhad has increased its revenue over the last three years. If the company can keep growing revenue, there may be an opportunity for investors. You might have to dig deeper to understand the recent share price weakness.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Matrix Concepts Holdings Berhad's financial health with this free report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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, Matrix Concepts Holdings Berhad's TSR for the last 3 years was -4.1%, 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

Matrix Concepts Holdings Berhad shareholders are down 3.8% for the year (even including dividends), but the market itself is up 3.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Matrix Concepts Holdings Berhad better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Matrix Concepts Holdings Berhad you should be aware of.

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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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