By purchasing an index fund, investors can approximate the average return of the market. But if you pick good individual stocks, you can get good returns.Please take a look Three-A Resources Berhad (KLSE:3A), which is up 15% over three years and significantly outpaces the market return of 4.4% (not including dividends). On the other hand, recent earnings haven’t been very good, with shareholder returns including dividends at just 14%.
So let’s do some research and see if the company’s long-term performance is in line with the progress of its underlying business.
Check out our latest analysis for Three-A Resources Berhad.
in his essay Graham & Doddsville SuperInvestors Warren Buffett has said that stock prices do not always rationally reflect the value of a company. By comparing earnings per share (EPS) and share price changes over time, we can learn how investor attitudes to a company have changed over time.
Three-A Resources Berhad was able to grow its EPS by 14% per year over three years, which drove the share price higher. The average annual share price increase of 5% is actually lower than the EPS growth rate. Therefore, we can reasonably conclude that the market is cooling the stock price. His low P/E ratio of 9.85 also likely reflects negative sentiment towards the stock.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Before buying or selling a stock, we always recommend taking a closer look at its historical growth trends, available here.
What will happen to the dividend?
It’s important to consider not only the share price return, but also the total shareholder return for a particular stock. 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 increases and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. For Three-A Resources Berhad, the TSR for the last three years was 26%. This exceeds the stock return mentioned earlier. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
Three-A Resources Berhad offered a TSR of 14% over the last twelve months. However, this was below the market average. The silver lining is that this return was actually better than his five-year average annual return of 4%. This could indicate that the company is attracting new investors as it pursues its strategy. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To do so, you need to know the following: 1 warning sign Found at Three-A Resources Berhad.
For people who like searching succeed in investing this free This list of growing companies with recent insider purchasing may be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.
Have feedback on this article? Interested in its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
