Simply Wall St. UOA Development Bhd (KLSE:UOADEV) shareholders have earned a 5.0% CAGR over the last five years Read full article [email protected] (Simply Wall St) 29 December 2023 at 1:00 am · 3-min read
It’s possible to achieve returns close to the market-weighted average return by buying an index fund. But if you pick the right individual stocks, you could make more — or less — than that. While the UOA Development Bhd (KLSE:UOADEV) share price is down 18% over half a decade, the total return to shareholders (which includes dividends) was 28%. And that total return actually beats the market decline of 16%.
With that in mind, it’s worth seeing if the company’s underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for UOA Development Bhd
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Looking back five years, both UOA Development Bhd’s share price and EPS declined; the latter at a rate of 19% per year. This fall in the EPS is worse than the 4% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
KLSE:UOADEV Earnings Per Share Growth December 28th 2023 Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
What About Dividends? When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return . The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, UOA Development Bhd’s TSR for the last 5 years was 28%, which exceeds the share price return mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!
Story continues A Different Perspective It’s good to see that UOA Development Bhd has rewarded shareholders with a total shareholder return of 28% in the last twelve months. And that does include the dividend. That’s better than the annualised return of 5% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for UOA Development Bhd (of which 1 shouldn’t be ignored!) you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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 provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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