When we invest, we typically look for stocks that outperform the market average. And the truth is, if you buy a quality business at the right price, you can make big profits. That said, YHI International’s stock price rose 26% in his five years, easily outpacing the market’s 25% decline (ignoring dividends). On the other hand, recent profits have been less impressive, with shareholder return including dividends at just 4.0%.
So let’s assess the underlying fundamentals over the past five years to see if they have kept pace with shareholder returns.
Check out our latest analysis for YHI International.
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.
During the five-year period of share price growth, YHI International’s EPS actually decreased by 1.0% per year.
The market was probably a little worried about the company before, as EPS is down a bit but the stock price is up, but the reality was better than feared. However, in the long term, it will be difficult for the stock price to continue rising unless EPS improves.
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 YHI International’s key metrics by checking this interactive graph of YHI International’s earnings, revenue and cash flow.
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. Coincidentally, YHI International’s TSR over the past five years was 77%, which is better than the share price return mentioned above. And there’s no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
It’s good to see that YHI International shareholders received a total shareholder return of 4.0% over the last year. That includes dividends. However, the 5-year TSR is 12% per year, which is even more impressive. A pessimistic view might be that while there are periods when stocks are at their best, prices may simply be stagnant while the business itself continues. 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. For example, we discovered that 1 warning sign for YHI International What you need to know before investing here.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Singapore exchanges.
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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.
