Investing in Gas Malaysia Berhad (KLSE:GASMSIA) a year ago would have delivered you a 29% gain

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The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Gas Malaysia Berhad (KLSE:GASMSIA) share price is 22% higher than it was a year ago, much better than the market decline of around 0.7% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 17% higher than it was three years ago.

So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.

See our latest analysis for Gas Malaysia 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 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).

Gas Malaysia Berhad was able to grow EPS by 46% in the last twelve months. This EPS growth is significantly higher than the 22% increase in the share price. Therefore, it seems the market isn’t as excited about Gas Malaysia Berhad as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.34.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growthearnings-per-share-growth

earnings-per-share-growth

We know that Gas Malaysia Berhad has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

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. In the case of Gas Malaysia Berhad, it has a TSR of 29% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It’s nice to see that Gas Malaysia Berhad shareholders have received a total shareholder return of 29% over the last year. And that does include the dividend. That’s better than the annualised return of 9% over half a decade, implying that the company is doing better recently. 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 Gas Malaysia Berhad better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Gas Malaysia Berhad (of which 1 makes us a bit uncomfortable!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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