Introducing Singapore Technologies Engineering (SGX:S63), A Stock That Climbed 15% In The Last Three Years

By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, the Singapore Technologies Engineering Ltd (SGX:S63) share price is up 15% in the last three years, clearly besting than the market return of around 9.7% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 8.8% in the last year, including dividends.

View our latest analysis for Singapore Technologies Engineering

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 the three years of share price growth, Singapore Technologies Engineering actually saw its earnings per share (EPS) drop 2.4% per year. While EPS is down but the share price is moving up, neither move is particularly drastic, suggesting the market was previously too pessimistic. Ultimately, though, we don't think it can maintain share price gains without turning around the EPS growth.

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 Singapore Technologies Engineering's key metrics by checking this interactive graph of Singapore Technologies Engineering's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Singapore Technologies Engineering, it has a TSR of 31% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Singapore Technologies Engineering shareholders have received a total shareholder return of 8.8% over one year. And that does include the dividend. That's better than the annualised return of 3.7% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Importantly, we haven't analysed Singapore Technologies Engineering's dividend history. This freevisual report on its dividends is a must-read if you're thinking of buying.

Of course Singapore Technologies Engineering may not be the best stock to buy. So you may wish to see this freecollection of growth stocks.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.