While it may not be enough for some shareholders, we think it is good to see the Ann Joo Resources Berhad (KLSE:ANNJOO) share price up 14% in a single quarter. Meanwhile over the last three years the stock has dropped hard. Tragically, the share price declined 53% in that time. So it’s good to see it climbing back up. Perhaps the company has turned over a new leaf.
It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.
Check out our latest analysis for Ann Joo Resources Berhad
Ann Joo Resources Berhad isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over three years, Ann Joo Resources Berhad grew revenue at 11% per year. That’s a fairly respectable growth rate. That contrasts with the weak share price, which has fallen 15% compounded, over three years. The market must have had really high expectations to be disappointed with this progress. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Ann Joo Resources Berhad
What About The Total Shareholder Return (TSR)?
We’d be remiss not to mention the difference between Ann Joo Resources Berhad’s total shareholder return (TSR) and its share price return. 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. Dividends have been really beneficial for Ann Joo Resources Berhad shareholders, and that cash payout explains why its total shareholder loss of 50%, over the last 3 years, isn’t as bad as the share price return.
A Different Perspective
Ann Joo Resources Berhad shareholders are up 16% for the year. But that return falls short of the market. But at least that’s still a gain! Over five years the TSR has been a reduction of 2% per year, over five years. It could well be that the business is stabilizing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We’ve identified 1 warning sign with Ann Joo Resources Berhad , and understanding them should be part of your investment process.
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 Malaysian exchanges.
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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.
