World Precision Machinery's (SGX:B49) five-year earnings growth trails the 27% YoY shareholder returns

It hasn't been the best quarter for World Precision Machinery Limited (SGX:B49) shareholders, since the share price has fallen 18% in that time. But that scarcely detracts from the really solid long term returns generated by the company over five years. We think most investors would be happy with the 130% return, over that period. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Only time will tell if there is still too much optimism currently reflected in the share price.

Since it's been a strong week for World Precision Machinery shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for World Precision Machinery

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

Over half a decade, World Precision Machinery managed to grow its earnings per share at 11% a year. This EPS growth is lower than the 18% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Dividend Lost

The value of past dividends are accounted for in the total shareholder return (TSR), but not in the share price return mentioned above. Many would argue the TSR gives a more complete picture of the value a stock brings to its holders. World Precision Machinery's TSR over the last 5 years is 230%; better than its share price return. Even though the company isn't paying dividends at the moment, it has done in the past.

A Different Perspective

It's nice to see that World Precision Machinery shareholders have received a total shareholder return of 27% over the last year. However, that falls short of the 27% TSR per annum it has made for shareholders, each year, over five years. 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. Even so, be aware that World Precision Machinery is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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 Singaporean 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.