Generally, the goal of active stock selection is to find companies that provide returns above the market average. Acquiring undervalued companies is one path to excess profits. That said, BM GreenTech Berhad's share price is up 76% in his five years, easily exceeding his 1.0% market return (ignoring dividends). On the other hand, recent profits have been less impressive, with shareholders only getting a return of 38%, including dividends.
Let's look at the underlying fundamentals over the long term and see if they are aligned with shareholder returns.
Check out our latest analysis for BM GreenTech Berhad.
in his essay Graham & Doddsville SuperInvestors Warren Buffett has said that stock prices do not always rationally reflect the value of a company. 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.
BM GreenTech Berhad achieved compound earnings per share (EPS) growth of 4.8% per year during the five-year share price growth period. This EPS growth rate is lower than the average annual increase in the share price of 12%. So it's fair to think the market has a higher valuation for this business than it did five years ago. This isn't necessarily surprising, given its track record of profit growth over the past five years.
The company's earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
We know that BM GreenTech Berhad has been improving its earnings lately, but will its earnings grow? Why not check this out? free A report showing analyst revenue forecasts.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, 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. For BM GreenTech Berhad, the TSR for the last 5 years is 98%. This exceeds the stock return mentioned earlier. And there's no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
We're pleased to report that BM GreenTech Berhad shareholders received a total shareholder return of 38% over one year. That includes dividends. This growth rate is better than the five-year annual TSR (15%). So it seems like sentiment around the company has been positive lately. Optimists might think that the recent improvement in TSR indicates that the business itself is improving over time. Before forming an opinion on BM GreenTech Berhad, you may want to consider the following three metrics:
If you want to buy stocks with management, you might like this free List of companies. (Hint: Insiders are buying them).
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 using only unbiased methodologies, and the articles are not intended as 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.
