One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. Just take a look at Boustead Projects Limited (SGX:AVM), which is up 27%, over three years, soundly beating the market return of 4.3% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 19% in the last year , including dividends .
Check out our latest analysis for Boustead Projects
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 last three years, Boustead Projects failed to grow earnings per share, which fell 4.1% (annualized).
Given the share price resilience, we don't think the (declining) EPS numbers are a good measure of how the business is moving forward, right now. 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.
The modest 1.6% dividend yield is unlikely to be propping up the share price. We severely doubt anyone is particularly impressed with the modest 1.2% three-year revenue growth rate. So truth be told we can't see an easy explanation for the share price action, but perhaps you can...
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Boustead Projects's balance sheet strength is a great place to start, if you want to investigate the stock further.
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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Boustead Projects, it has a TSR of 36% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that Boustead Projects shareholders have gained 19% (in total) over the last year. That's including the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 11%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. Before deciding if you like the current share price, check how Boustead Projects scores on these 3 valuation metrics.