One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Apollo Food Holdings Berhad (KLSE:APOLLO) shareholders have seen the share price rise 22% over three years, well in excess of the market return (0.2%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 11% in the last year , 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.
Check out our latest analysis for Apollo Food Holdings Berhad
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
Apollo Food Holdings Berhad was able to grow its EPS at 27% per year over three years, sending the share price higher. The average annual share price increase of 7% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.22.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Apollo Food Holdings Berhad's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Apollo Food Holdings Berhad the TSR over the last 3 years was 49%, 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
We're pleased to report that Apollo Food Holdings Berhad shareholders have received a total shareholder return of 11% over one year. And that does include the dividend. That's better than the annualised return of 5% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Apollo Food Holdings Berhad better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Apollo Food Holdings Berhad .