Stock Analysis

Malakoff Corporation Berhad (KLSE:MALAKOF) stock falls 7.5% in past week as five-year earnings and shareholder returns continue downward trend

  •  Updated
KLSE:MALAKOF
Source: Shutterstock

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Malakoff Corporation Berhad (KLSE:MALAKOF), since the last five years saw the share price fall 40%. More recently, the share price has dropped a further 11% in a month. We do note, however, that the broader market is down 5.6% in that period, and this may have weighed on the share price.

After losing 7.5% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Malakoff Corporation Berhad

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Looking back five years, both Malakoff Corporation Berhad's share price and EPS declined; the latter at a rate of 5.6% per year. This reduction in EPS is less than the 10% 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).

earnings-per-share-growth
KLSE:MALAKOF Earnings Per Share Growth September 30th 2022

This free interactive report on Malakoff Corporation Berhad's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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. In the case of Malakoff Corporation Berhad, it has a TSR of -15% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market lost about 8.8% in the twelve months, Malakoff Corporation Berhad shareholders did even worse, losing 18% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 - Malakoff Corporation Berhad has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you are like me, then you will not want to miss this free list of growing companies 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 MY exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Malakoff Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About KLSE:MALAKOF

Malakoff Corporation Berhad

Malakoff Corporation Berhad, an investment holding company, operates as an independent power producer and environmental management company in Malaysia, Indonesia, and the Middle East.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth0
Past Performance2
Financial Health2
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Undervalued second-rate dividend payer.