These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more -- or less -- than that. The Apollo Food Holdings Berhad (KLSE:APOLLO) stock price is down 21% over five years, but the total shareholder return is 6.1% once you include the dividend. And that total return actually beats the market decline of 1.0%. And the share price decline continued over the last week, dropping some 7.5%.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
View our latest analysis for Apollo Food Holdings Berhad
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the five years over which the share price declined, Apollo Food Holdings Berhad's earnings per share (EPS) dropped by 2.0% each year. This reduction in EPS is less than the 5% annual reduction in the share price. This implies that the market was previously too optimistic about the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Apollo Food Holdings Berhad's key metrics by checking this interactive graph of Apollo Food Holdings Berhad's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Apollo Food Holdings Berhad, it has a TSR of 6.1% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's nice to see that Apollo Food Holdings Berhad shareholders have received a total shareholder return of 4.2% over the last year. Of course, that includes the dividend. That's better than the annualised return of 1.2% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 3 warning signs for Apollo Food Holdings Berhad (1 makes us a bit uncomfortable) that you should be aware of.