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By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, Malaysia Building Society Berhad (KLSE:MBSB) shareholders have seen the share price rise 32% over three years, well in excess of the market decline (2.6%, not including dividends).
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for Malaysia Building Society Berhad
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Over the last three years, Malaysia Building Society Berhad failed to grow earnings per share, which fell 8.3% (annualized).
Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Therefore, we think it's worth considering other metrics as well.
Interestingly, the dividend has increased over time; so that may have given the share price a boost. Sometimes yield-chasing investors will flock to a company if they think the dividend can grow over time. On top of that, revenue grew at a rate of 3.0% per year, and it's likely investors interpret that as pointing to a brighter future.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Malaysia Building Society Berhad has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Malaysia Building Society Berhad
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. As it happens, Malaysia Building Society Berhad's TSR for the last 3 years was 66%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Malaysia Building Society Berhad shareholders have received a total shareholder return of 48% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 1.7%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 risks, for instance. Every company has them, and we've spotted 2 warning signs for Malaysia Building Society Berhad you should know about.