The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term Syarikat Takaful Malaysia Keluarga Berhad (KLSE:TAKAFUL) shareholders for doubting their decision to hold, with the stock down 31% over a half decade. The last week also saw the share price slip down another 5.6%.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Syarikat Takaful Malaysia Keluarga 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 the five years over which the share price declined, Syarikat Takaful Malaysia Keluarga Berhad's earnings per share (EPS) dropped by 1.0% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 7% per year, over the period. This implies that the market was previously too optimistic about the stock. The less favorable sentiment is reflected in its current P/E ratio of 8.94.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on Syarikat Takaful Malaysia Keluarga Berhad's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of Syarikat Takaful Malaysia Keluarga Berhad, it has a TSR of -18% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Syarikat Takaful Malaysia Keluarga Berhad provided a TSR of 14% over the year (including dividends). That's fairly close to the broader market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 3% over the last five years. While 'turnarounds seldom turn' there are green shoots for Syarikat Takaful Malaysia Keluarga Berhad. It's always interesting to track share price performance over the longer term. But to understand Syarikat Takaful Malaysia Keluarga Berhad better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Syarikat Takaful Malaysia Keluarga Berhad you should be aware of, and 1 of them is a bit unpleasant.