Investing can be hard but the potential fo an individual stock to pay off big time inspires us. Not every pick can be a winner, but when you pick the right stock, you can win big. Take, for example, the Ancom Nylex Berhad (KLSE:ANCOMNY) share price, which skyrocketed 479% over three years. It's down 1.0% in the last seven days.
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.
View our latest analysis for Ancom Nylex 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. 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.
During three years of share price growth, Ancom Nylex Berhad achieved compound earnings per share growth of 92% per year. We note that the 80% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. That suggests that the market sentiment around the company hasn't changed much over that time. Rather, the share price has approximately tracked EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Ancom Nylex Berhad has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Ancom Nylex Berhad's financial health with this free report on its balance sheet.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Ancom Nylex Berhad's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Ancom Nylex Berhad's TSR of 509% for the 3 years exceeded its share price return, because it has paid dividends.
A Different Perspective
It's nice to see that Ancom Nylex Berhad shareholders have received a total shareholder return of 2.2% over the last year. However, the TSR over five years, coming in at 38% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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. To that end, you should learn about the 2 warning signs we've spotted with Ancom Nylex Berhad (including 1 which can't be ignored) .