By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, the LBS Bina Group Berhad (KLSE:LBS) share price is up 38% in the last three years, clearly besting the market decline of around 1.0% (not including dividends).
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 LBS Bina Group Berhad
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
LBS Bina Group Berhad was able to grow its EPS at 50% per year over three years, sending the share price higher. The average annual share price increase of 11% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.67.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how LBS Bina Group Berhad has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at LBS Bina Group Berhad's financial health with this free report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 LBS Bina Group Berhad the TSR over the last 3 years was 57%, 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 LBS Bina Group Berhad shareholders have received a total shareholder return of 40% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that LBS Bina Group Berhad is showing 1 warning sign in our investment analysis , you should know about...