These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Hume Cement Industries Berhad (KLSE:HUMEIND) share price is 73% higher than it was a year ago, much better than the market decline of around 1.8% (not including dividends) in the same period. So that should have shareholders smiling. Also impressive, the stock is up 55% over three years, making long term shareholders happy, too.
Since the stock has added RM97m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Hume Cement Industries 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. 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 the last year Hume Cement Industries Berhad grew its earnings per share, moving from a loss to a profit.
When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.
We think that the revenue growth of 54% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Hume Cement Industries Berhad has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Hume Cement Industries Berhad stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that Hume Cement Industries Berhad shareholders have received a total shareholder return of 73% over one year. That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Hume Cement Industries Berhad better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Hume Cement Industries Berhad (including 1 which is a bit concerning) .