In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in AmanahRaya Real Estate Investment Trust (KLSE:ARREIT), since the last five years saw the share price fall 50%. We also note that the stock has performed poorly over the last year, with the share price down 28%.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for AmanahRaya Real Estate Investment Trust
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Looking back five years, both AmanahRaya Real Estate Investment Trust's share price and EPS declined; the latter at a rate of 45% per year. This fall in the EPS is worse than the 13% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into AmanahRaya Real Estate Investment Trust's key metrics by checking this interactive graph of AmanahRaya Real Estate Investment Trust's earnings, revenue and cash flow.
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. As it happens, AmanahRaya Real Estate Investment Trust's TSR for the last 5 years was -30%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
AmanahRaya Real Estate Investment Trust shareholders are down 25% for the year (even including dividends), but the market itself is up 9.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand AmanahRaya Real Estate Investment Trust better, we need to consider many other factors. Even so, be aware that AmanahRaya Real Estate Investment Trust is showing 5 warning signs in our investment analysis , and 2 of those are concerning...