Advertisement
Singapore markets closed
  • Straits Times Index

    3,297.55
    -26.98 (-0.81%)
     
  • Nikkei

    38,814.56
    +94.06 (+0.24%)
     
  • Hang Seng

    17,941.78
    -170.82 (-0.94%)
     
  • FTSE 100

    8,146.86
    -16.81 (-0.21%)
     
  • Bitcoin USD

    66,565.42
    +448.84 (+0.68%)
     
  • CMC Crypto 200

    1,383.06
    -34.81 (-2.45%)
     
  • S&P 500

    5,431.60
    -2.14 (-0.04%)
     
  • Dow

    38,589.16
    -57.94 (-0.15%)
     
  • Nasdaq

    17,688.88
    +21.28 (+0.12%)
     
  • Gold

    2,348.40
    +30.40 (+1.31%)
     
  • Crude Oil

    78.49
    -0.13 (-0.17%)
     
  • 10-Yr Bond

    4.2130
    -0.0250 (-0.59%)
     
  • FTSE Bursa Malaysia

    1,607.32
    -2.85 (-0.18%)
     
  • Jakarta Composite Index

    6,734.83
    -96.73 (-1.42%)
     
  • PSE Index

    6,383.70
    -7.13 (-0.11%)
     

Deleum Berhad (KLSE:DELEUM) shareholders have earned a 43% CAGR over the last three years

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Deleum Berhad (KLSE:DELEUM) share price has flown 151% in the last three years. Most would be happy with that. Then again, the 8.3% share price decline hasn't been so fun for shareholders. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for Deleum Berhad

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. 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.

ADVERTISEMENT

During three years of share price growth, Deleum Berhad achieved compound earnings per share growth of 50% per year. This EPS growth is higher than the 36% average annual increase in the share price. 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 11.56.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

It is of course excellent to see how Deleum Berhad has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Deleum 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Deleum Berhad the TSR over the last 3 years was 192%, 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 Deleum Berhad shareholders have received a total shareholder return of 55% over the last year. That's including the dividend. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For example, we've discovered 1 warning sign for Deleum Berhad that you should be aware of before investing here.

We will like Deleum Berhad better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.