It’s easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the UOL Group Limited (SGX:U14) share price is down 26% in the last year. That contrasts poorly with the market return of -4.7%. On the other hand, the stock is actually up 9.5% over three years. There was little comfort for shareholders in the last week as the price declined a further 2.3%.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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.
Unfortunately UOL Group reported an EPS drop of 53% for the last year. The share price fall of 26% isn’t as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared.
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 UOL Group’s key metrics by checking this interactive graph of UOL Group’s earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We’ve already covered UOL Group’s share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings. Dividends have been really beneficial for UOL Group shareholders, and that cash payout explains why its total shareholder loss of 25%, over the last year, isn’t as bad as the share price return.
A Different Perspective
We regret to report that UOL Group shareholders are down 25% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 4.7%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 3.9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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 SG exchanges.
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 email@example.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.