Yahoo Finance Investing in Ranhill Utilities Berhad (KLSE:RANHILL) a year ago would have delivered you a 121% gain
When you buy shares in a company, there is always a risk that the price drops to zero. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example Ranhill Utilities Berhad (KLSE:RANHILL). Its share price is already up an impressive 106% in the last twelve months. On top of that, the share price is up 41% in about a quarter. Having said that, the longer term returns aren't so impressive, with stock gaining just 3.4% in three years.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
View our latest analysis for Ranhill Utilities Berhad
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 the last year Ranhill Utilities Berhad grew its earnings per share (EPS) by 257%. This EPS growth is significantly higher than the 106% increase in the share price. Therefore, it seems the market isn't as excited about Ranhill Utilities Berhad as it was before. This could be an opportunity. The caution is also evident in the lowish P/E ratio of 11.24.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Ranhill Utilities Berhad has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.
What About Dividends?
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Ranhill Utilities Berhad the TSR over the last 1 year was 121%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that Ranhill Utilities Berhad has rewarded shareholders with a total shareholder return of 121% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 0.9%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 4 warning signs for Ranhill Utilities Berhad (2 are significant!) that you should be aware of before investing here.
Of course Ranhill Utilities Berhad may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
