Geo Energy Resources (SGX:RE4) Has Compensated Shareholders With A Respectable 77% Return On Their Investment

When we invest, we're generally looking for stocks that outperform the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, the Geo Energy Resources Limited (SGX:RE4) share price is up 54% in the last 5 years, clearly besting the market decline of around 2.0% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 34% in the last year.

See our latest analysis for Geo Energy Resources

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 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 of share price growth, Geo Energy Resources moved from a loss to profitability. That's generally thought to be a genuine positive, so we would expect to see an increasing share price. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. In fact, the Geo Energy Resources stock price is 24% lower in the last three years. Meanwhile, EPS is up 5.6% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -9% per year.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

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

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Geo Energy Resources' total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Geo Energy Resources shareholders, and that cash payout contributed to why its TSR of 77%, over the last 5 years, is better than the share price return.

A Different Perspective

It's nice to see that Geo Energy Resources shareholders have received a total shareholder return of 34% over the last year. That's better than the annualised return of 12% 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. 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 Geo Energy Resources is showing 2 warning signs in our investment analysis , you should know about...

But note: Geo Energy Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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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. 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.
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