Investing in Lum Chang Holdings (SGX:L19) five years ago would have delivered you a 31% gain




  • In Business
  • 2023-01-19 02:14:29Z
  • By Simply Wall St.
 

Ideally, your overall portfolio should beat the market average. But if you pick the right individual stocks, you could make more -- or less -- than that. The Lum Chang Holdings Limited (SGX:L19) stock price is down 10% over five years, but the total shareholder return is 31% once you include the dividend. That's better than the market which declined 7.3% over the same time.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

Check out our latest analysis for Lum Chang Holdings

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 five years Lum Chang Holdings' earnings per share dropped significantly, falling to a loss, with the share price also lower. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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. 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. As it happens, Lum Chang Holdings' TSR for the last 5 years was 31%, 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 nice to see that Lum Chang Holdings shareholders have received a total shareholder return of 7.1% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. 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 3 warning signs for Lum Chang Holdings (1 is a bit concerning!) that you should be aware of before investing here.

We will like Lum Chang Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies 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 SG 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.

Join A Paid User Research Session
You'll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

COMMENTS

More Related News

Breville Group (ASX:BRG) jumps 7.3% this week, though earnings growth is still tracking behind five-year shareholder returns
Breville Group (ASX:BRG) jumps 7.3% this week, though earnings growth is still tracking behind five-year shareholder returns

Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make...

How Much You Would
How Much You Would've Lost Investing in These Super Bowl Advertisers From Last Year

In addition to being America's professional football championship game, the Super Bowl is also the most-watched television event in America every year. With ...

Danaos
Danaos' (NYSE:DAC) investors will be pleased with their incredible 908% return over the last three years

We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many...

Investing in Apollo Medical Holdings (NASDAQ:AMEH) five years ago would have delivered you a 89% gain
Investing in Apollo Medical Holdings (NASDAQ:AMEH) five years ago would have delivered you a 89% gain

When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make...

Investors in Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) have made a return of 26% over the past five years
Investors in Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) have made a return of 26% over the past five years

Ideally, your overall portfolio should beat the market average. But even in a market-beating portfolio, some stocks...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business