Many investors define investment success as outperforming the market average over the long term. However, if you try your hand at stock picking, the risk return will be lower than the market.I regret that it has been a long time since I last reported. Lii Hen Industries Bhd (KLSE:LIIHEN) shareholders saw the share price fall 20% in three years, compared to a market decline of around 9.5%.
So let's take a look at whether the company's long-term performance is in line with the progress of its underlying business.
Check out our latest analysis for Lii Hen Industries Bhd.
in his essay Graham & Doddsville SuperInvestors Warren Buffett explained 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.
Over the three years that the share price fell, Lii Hen Industries Bhd's earnings per share (EPS) decreased by 8.9% each year. This EPS decline is worse than the 7% compounded annual share price decline. So the market may not be too worried about the EPS numbers at the moment, or it may have been pricing in some decline for some time.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO's compensation is more modest than most CEOs at similarly capitalized companies. However, while CEO pay is always worth checking, the really important question is whether the company can grow its earnings going forward.It might be well worth taking a look at ours free Lii Hen Industries Bhd earnings, revenue and cash flow report.
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. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. Coincidentally, Lii Hen Industries Bhd's TSR over the last three years was -4.9%, which is better than the share price return mentioned above. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
We're pleased to report that Lii Hen Industries Bhd shareholders received a total shareholder return of 28% over one year. Of course, this includes dividends. This growth rate is better than the five-year annual TSR (8%). So sentiment around the company seems to be positive lately. Optimists might think that the recent improvement in TSR indicates that the business itself is improving over time. I think it's very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. For example, we discovered that 2 warning signs for Lii Hen Industries Bhd (1 is important!) You should be careful before investing here.
If you're like me, you will. do not have I want to miss this free A list of growing companies that insiders are buying.
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 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.
