Simply Wall St
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We think that it’s fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. Not every pick can be a winner, but when you pick the right stock, you can win big. Take, for example, the YTL Power International Berhad (KLSE:YTLPOWR) share price, which skyrocketed 520% over three years. On top of that, the share price is up 29% in about a quarter. We love happy stories like this one. The company should be really proud of that performance!
Since it’s been a strong week for YTL Power International Berhad shareholders, let’s have a look at trend of the longer term fundamentals.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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).
During three years of share price growth, YTL Power International Berhad achieved compound earnings per share growth of 66% per year. This EPS growth is lower than the 84% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It’s not unusual to see the market ‘re-rate’ a stock, after a few years of growth.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that YTL Power International Berhad has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on YTL Power International Berhad’s balance sheet strength is a great place to start, if you want to investigate the stock further.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, YTL Power International Berhad’s TSR for the last 3 years was 585%, which exceeds the share price return mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!
