The five-year loss for FoundPac Group Berhad (KLSE:FPGROUP) shareholders likely driven by its shrinking earnings

It is doubtless a positive to see that the FoundPac Group Berhad (KLSE:FPGROUP) share price has gained some 58% in the last three months. But that is little comfort to those holding over the last half decade, sitting on a big loss. The share price has failed to impress anyone , down a sizable 66% during that time. So we're not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.

On a more encouraging note the company has added RM19m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, FoundPac Group Berhad's earnings per share (EPS) dropped by 4.0% each year. This reduction in EPS is less than the 19% annual reduction in the share price. This implies that the market is more cautious about the business these days.

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

Dive deeper into FoundPac Group Berhad's key metrics by checking this interactive graph of FoundPac Group 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of FoundPac Group Berhad, it has a TSR of -59% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that FoundPac Group Berhad shareholders have received a total shareholder return of 22% over one year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 10% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand FoundPac Group Berhad better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for FoundPac Group Berhad (of which 1 is potentially serious!) you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.