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By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Envictus International Holdings Limited (SGX:BQD) shareholders have seen the share price rise 93% over three years, well in excess of the market return (9.4%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 54%.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for Envictus International Holdings
Envictus International Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years Envictus International Holdings has grown its revenue at 12% annually. That's pretty nice growth. While the share price has done well, compounding at 24% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Keep in mind that the strength of the balance sheet impacts the options open to the company.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on Envictus International Holdings' earnings, revenue and cash flow.
A Different Perspective
It's good to see that Envictus International Holdings has rewarded shareholders with a total shareholder return of 54% in the last twelve months. That's better than the annualised return of 5% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Envictus International Holdings is showing 4 warning signs in our investment analysis , and 1 of those is concerning...