It hasn't been the best quarter for Guan Chong Berhad (KLSE:GCB) shareholders, since the share price has fallen 20% in that time. On the bright side the returns have been quite good over the last half decade. Its return of 45% has certainly bested the market return!
The past week has proven to be lucrative for Guan Chong Berhad investors, so let's see if fundamentals drove the company's five-year performance.
View our latest analysis for Guan Chong Berhad
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...' 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.
During five years of share price growth, Guan Chong Berhad actually saw its EPS drop 5.3% per year.
This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
On the other hand, Guan Chong Berhad's revenue is growing nicely, at a compound rate of 15% over the last five years. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Guan Chong Berhad has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Guan Chong Berhad stock, you should check out this free report showing analyst profit forecasts.
We'd be remiss not to mention the difference between Guan Chong Berhad's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Guan Chong Berhad's TSR of 54% for the 5 years exceeded its share price return, because it has paid dividends.
It's good to see that Guan Chong Berhad has rewarded shareholders with a total shareholder return of 32% in the last twelve months. That's better than the annualised return of 9% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For instance, we've identified 2 warning signs for Guan Chong Berhad that you should be aware of.
For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could 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.