Malaysian Resources Corporation Berhad (KLSE:MRCB) shareholders might be concerned after seeing the share price drop 16% in the last quarter. But don't let that distract from the very nice return generated over three years. To wit, the share price did better than an index fund, climbing 34% during that period.
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 Malaysian Resources Corporation Berhad
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Malaysian Resources Corporation Berhad became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Malaysian Resources Corporation Berhad has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Malaysian Resources Corporation Berhad stock, you should check out this FREE detailed 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. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Malaysian Resources Corporation Berhad the TSR over the last 3 years was 40%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Malaysian Resources Corporation Berhad shareholders gained a total return of 13% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 4% endured over half a decade. So this might be a sign the business has turned its fortunes around. 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. Take risks, for example - Malaysian Resources Corporation Berhad has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.