By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Gagasan Nadi Cergas Berhad (KLSE:NADIBHD), which is up 15%, over three years, soundly beating the market decline of 1.8% (not including dividends).
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for Gagasan Nadi Cergas Berhad
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 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.
Over the last three years, Gagasan Nadi Cergas Berhad failed to grow earnings per share, which fell 69% (annualized).
The strong decline in earnings per share suggests the market isn't using EPS to judge the company. So we'll need to take a look at some different metrics to try to understand why the share price remains solid.
The revenue drop of 11% is as underwhelming as some politicians. The only thing that's clear is there is low correlation between Gagasan Nadi Cergas Berhad's share price and its historic fundamental data. Further research may be required!
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Gagasan Nadi Cergas Berhad's financial health with this free report on its balance sheet.
What About The Total Shareholder Return (TSR)?
Investors should note that there's a difference between Gagasan Nadi Cergas Berhad's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Gagasan Nadi Cergas Berhad's TSR of 19% for the 3 years exceeded its share price return, because it has paid dividends.
A Different Perspective
Gagasan Nadi Cergas Berhad shareholders are down 4.5% for the year, falling short of the market return. The market shed around 1.1%, no doubt weighing on the stock price. Investors are up over three years, booking 6% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with Gagasan Nadi Cergas Berhad (including 2 which are a bit unpleasant) .