These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the WCT Holdings Berhad (KLSE:WCT) share price is 51% higher than it was a year ago, much better than the market return of around 3.9% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Also impressive, the stock is up 47% over three years, making long term shareholders happy, too.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
See our latest analysis for WCT Holdings 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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the last year, WCT Holdings Berhad actually saw its earnings per share drop 97%.
This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
We are skeptical of the suggestion that the 0.9% dividend yield would entice buyers to the stock. Unfortunately WCT Holdings Berhad's fell 11% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that WCT Holdings Berhad has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling WCT Holdings Berhad stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that WCT Holdings Berhad has rewarded shareholders with a total shareholder return of 53% in the last twelve months. Of course, that includes the dividend. That certainly beats the loss of about 6% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with WCT Holdings Berhad (at least 1 which is significant) , and understanding them should be part of your investment process.