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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 Low Keng Huat (Singapore) Limited (SGX:F1E) shareholders for doubting their decision to hold, with the stock down 50% over a half decade. And it's not just long term holders hurting, because the stock is down 32% in the last year. The falls have accelerated recently, with the share price down 16% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 20% in the same timeframe.
View our latest analysis for Low Keng Huat (Singapore)
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Looking back five years, both Low Keng Huat (Singapore)'s share price and EPS declined; the latter at a rate of 40% per year. This fall in the EPS is worse than the 13% compound annual share price fall. So investors might expect EPS to bounce back -- or they may have previously foreseen the EPS decline.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
This free interactive report on Low Keng Huat (Singapore)'s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Low Keng Huat (Singapore) the TSR over the last 5 years was -36%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We regret to report that Low Keng Huat (Singapore) shareholders are down 30% for the year (even including dividends) . Unfortunately, that's worse than the broader market decline of 19%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8.4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Low Keng Huat (Singapore) better, we need to consider many other factors. Take risks, for example - Low Keng Huat (Singapore) has 4 warning signs (and 3 which make us uncomfortable) we think you should know about.