The easiest way to invest in stocks is to buy exchange-traded funds. But you can get even more value by choosing the right individual stocks. Bursa Malaysia (KLSE:BURSA) shares are 37% higher than they were a year ago, and well above the market return (excluding dividends) of around 21% over the same period. If this excellent performance can be sustained over the long term, investors would be in for a treat. That said, long-term returns have not been as impressive, with the share price rising just 7.1% in three years.
So let’s investigate 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 Bursa Malaysia Berhad
To paraphrase Benjamin Graham, “In the short run, the market is a voting machine, but in the long run, it’s a weighing machine.” 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 the last year, Bursa Malaysia Berhad grew its earnings per share (EPS) by 26%. This EPS growth is significantly lower than the 37% growth in the share price, so it’s fair to assume that the market values ​​the company more highly than it did a year ago.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know Bursa Malaysia has been improving its profit margins recently, but is revenue growing? If you’re interested, check here. free A report showing consensus revenue forecasts.
What about dividends?
As well as measuring the price return, investors should also consider the total shareholder return (TSR). While the 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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Bursa Malaysia Berhad, the TSR for the past year is 42%, which is higher than the price return mentioned earlier. This is mainly due to the dividend payments.
A different perspective
It’s nice to see that Bursa Malaysia Berhad shareholders have received a total shareholder return of 42% over the past year, including dividends. The stock’s performance appears to have improved recently, as the one-year TSR is better than the five-year TSR (the latter being 11% per year). Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on share price, there are other factors that are even more important. To that end, Two Warning Signs Issues found with Bursa Malaysia Berhad (including one potentially serious issue).
However, please note: Bursa Malaysia Berhad may not be the best stock to buySo, take a look at this free A list of interesting companies with past earnings growth (and future growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
