The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is PTT Synergy Group Berhad (KLSE:PTT) which saw its share price drive 260% higher over five years. On top of that, the share price is up 71% in about a quarter.
So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.
View our latest analysis for PTT Synergy Group Berhad
PTT Synergy Group Berhad wasn’t profitable in the last twelve months, it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last 5 years PTT Synergy Group Berhad saw its revenue grow at 32% per year. That’s well above most pre-profit companies. So it’s not entirely surprising that the share price reflected this performance by increasing at a rate of 29% per year, in that time. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes PTT Synergy Group Berhad worth investigating – it may have its best days ahead.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on PTT Synergy Group Berhad’s balance sheet strength is a great place to start, if you want to investigate the stock further.
What About The Total Shareholder Return (TSR)?
We’d be remiss not to mention the difference between PTT Synergy Group Berhad’s total shareholder return (TSR) and its share price return. 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. We note that PTT Synergy Group Berhad’s TSR, at 362% is higher than its share price return of 260%. When you consider it hasn’t been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It’s nice to see that PTT Synergy Group Berhad shareholders have received a total shareholder return of 95% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 36% per year), it would seem that the stock’s performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 4 warning signs with PTT Synergy Group Berhad (at least 3 which don’t sit too well with us) , and understanding them should be part of your investment process.
Of course PTT Synergy Group Berhad may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
