When we invest, we're generally looking for stocks that outperform the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, the Dagang NeXchange Berhad (KLSE:DNEX) share price is up 88% in the last 5 years, clearly besting the market return of around 7.1% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 21%.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Dagang NeXchange Berhad
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over half a decade, Dagang NeXchange Berhad managed to grow its earnings per share at 13% a year. We note, however, that extraordinary items have impacted earnings. This EPS growth is reasonably close to the 13% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Indeed, it would appear the share price is reacting to the EPS.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Dagang NeXchange Berhad's key metrics by checking this interactive graph of Dagang NeXchange Berhad's earnings, revenue and cash flow.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Dagang NeXchange Berhad's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Dagang NeXchange Berhad shareholders, and that cash payout contributed to why its TSR of 92%, over the last 5 years, is better than the share price return.
A Different Perspective
Dagang NeXchange Berhad shareholders gained a total return of 21% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 14% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. You could get a better understanding of Dagang NeXchange Berhad's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.