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Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And in our experience, buying the right stocks can give your wealth a significant boost. To wit, the Singapore Shipping share price has climbed 12% in five years, easily topping the market return of -3.2% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 7.1% in the last year, including dividends.
View our latest analysis for Singapore Shipping
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During five years of share price growth, Singapore Shipping achieved compound earnings per share (EPS) growth of 4.5% per year. The EPS growth is more impressive than the yearly share price gain of 2.2% over the same period. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.76.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Singapore Shipping's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Singapore Shipping's TSR for the last 5 years was 33%, 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
Singapore Shipping provided a TSR of 7.1% over the year (including dividends). That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 5.8% per year. 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. Importantly, we haven't analysed Singapore Shipping's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.