Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the Mah Sing Group Berhad (KLSE:MAHSING) share price is up 68% in the last 1 year, clearly besting the market return of around 1.5% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! In contrast, the longer term returns are negative, since the share price is 3.4% lower than it was three years ago.
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.
Check out our latest analysis for Mah Sing Group 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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Mah Sing Group Berhad was able to grow EPS by 66% in the last twelve months. This EPS growth is remarkably close to the 68% increase in the share price. This makes us think the market hasn't really changed its sentiment around the company, in the last year. It looks like the share price is responding 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).
We know that Mah Sing Group 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 Mah Sing Group Berhad's financial health with this free report on its balance sheet.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Mah Sing Group Berhad the TSR over the last 1 year was 75%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Mah Sing Group Berhad shareholders have received a total shareholder return of 75% over the last year. That's including the dividend. That's better than the annualised return of 0.8% 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. To that end, you should be aware of the 1 warning sign we've spotted with Mah Sing Group Berhad .