Investors in Astino Berhad (KLSE:ASTINO) have seen favorable returns of 88% over the past five years

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

Investors in Astino Berhad (KLSE:ASTINO) have seen favorable returns of 88% over the past five years

Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. Buying under-rated businesses is one path to excess returns. To wit, the Astino Berhad share price has climbed 73% in five years, easily topping the market return of 7.9% (ignoring dividends). On the other hand, the more recent gains haven’t been so impressive, with shareholders gaining just 28%, including dividends.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

This is the hidden content, please

• Sign In
• or
• Sign Up

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Astino Berhad achieved compound earnings per share (EPS) growth of 11% per year. So the EPS growth rate is rather close to the annualized share price gain of 12% per year. That suggests that the market sentiment around the company hasn’t changed much over that time. In fact, the share price seems to largely reflect the EPS growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This is the hidden content, please

• Sign In
• or
• Sign Up

earnings-per-share-growth

We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Astino Berhad’s

This is the hidden content, please

• Sign In
• or
• Sign Up

is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Astino Berhad the TSR over the last 5 years was 88%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Astino Berhad shareholders have received returns of 28% over twelve months (even including dividends), which isn’t far from the general market return. Most would be happy with a gain, and it helps that the year’s return is actually better than the average return over five years, which was 14%. Even if the share price growth slows down from here, there’s a good chance that this is business worth watching in the long term. It’s always interesting to track share price performance over the longer term. But to understand Astino Berhad better, we need to consider many other factors. Take risks, for example – Astino Berhad has

This is the hidden content, please

• Sign In
• or
• Sign Up

we think you should be aware of.

Story continues

If you are like me, then you will not want to miss this free

This is the hidden content, please

• Sign In
• or
• Sign Up

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.

Have feedback on this article? Concerned about the content?

This is the hidden content, please

• Sign In
• or
• Sign Up

with us directly. Alternatively, email *****@*****.tld

This is the hidden content, please

• Sign In
• or
• Sign Up

#Investors #Astino #Berhad #KLSEASTINO #favorable #returns #years

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up