In This Article:
Samudera Shipping Line Ltd (SGX:S56) shareholders might be concerned after seeing the share price drop 20% in the last month. But over five years returns have been remarkably great. In that time, the share price has soared some 432% higher! Arguably, the recent fall is to be expected after such a strong rise. But the real question is whether the business fundamentals can improve over the long term.
While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
Check out our latest analysis for Samudera Shipping Line
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.
During five years of share price growth, Samudera Shipping Line achieved compound earnings per share (EPS) growth of 44% per year. So the EPS growth rate is rather close to the annualized share price gain of 40% per year. This indicates that investor sentiment towards the company has not changed a great deal. Rather, the share price has approximately tracked EPS growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Samudera Shipping Line's TSR for the last 5 years was 969%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's good to see that Samudera Shipping Line has rewarded shareholders with a total shareholder return of 16% in the last twelve months. And that does include the dividend. However, the TSR over five years, coming in at 61% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Samudera Shipping Line better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Samudera Shipping Line you should be aware of.