Those who invested in YTL Power International Berhad (KLSE:YTLPOWR) five years ago are up 670%

Long term investing can be life changing when you buy and hold the truly great businesses. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held YTL Power International Berhad (KLSE:YTLPOWR) shares for the last five years, while they gained 536%. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 24% over the last quarter. We love happy stories like this one. The company should be really proud of that performance!

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During five years of share price growth, YTL Power International Berhad achieved compound earnings per share (EPS) growth of 45% per year. This EPS growth is remarkably close to the 45% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. In fact, the share price seems to largely reflect the EPS growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

We know that YTL Power International Berhad has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at YTL Power International Berhad's financial health with this free report on its balance sheet.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of YTL Power International Berhad, it has a TSR of 670% 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

It's nice to see that YTL Power International Berhad shareholders have received a total shareholder return of 6.3% over the last year. Of course, that includes the dividend. Having said that, the five-year TSR of 50% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand YTL Power International Berhad better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for YTL Power International 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 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.