The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the SAM Engineering & Equipment (M) Berhad (KLSE:SAM) share price has soared 203% in the last half decade. Most would be very happy with that. On top of that, the share price is up 16% in about a quarter.
Since it’s been a strong week for SAM Engineering & Equipment (M) Berhad shareholders, let’s have a look at trend of the longer term fundamentals.
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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. 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.
During five years of share price growth, SAM Engineering & Equipment (M) Berhad achieved compound earnings per share (EPS) growth of 2.6% per year. This EPS growth is lower than the 25% average annual increase in the share price. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. And that’s hardly shocking given the track record of growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worthwhile taking a look at our free report on SAM Engineering & Equipment (M) Berhad’s earnings, revenue and cash flow.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. In the case of SAM Engineering & Equipment (M) Berhad, it has a TSR of 222% for the last 5 years. That exceeds its share price return that we previously mentioned. And there’s no prize for guessing that the dividend payments largely explain the divergence!
It’s nice to see that SAM Engineering & Equipment (M) Berhad shareholders have received a total shareholder return of 15% over the last year. That’s including the dividend. However, the TSR over five years, coming in at 26% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Before deciding if you like the current share price, check how SAM Engineering & Equipment (M) Berhad scores on these 3 valuation metrics.