Investing in Fiamma Holdings Berhad (KLSE:FIAMMA) five years ago would have delivered you a 186% gain

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When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. Long term Fiamma Holdings Berhad (KLSE:FIAMMA) shareholders would be well aware of this, since the stock is up 148% in five years. Also pleasing for shareholders was the 23% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.

Check out our latest analysis for Fiamma Holdings Berhad

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Fiamma Holdings Berhad managed to grow its earnings per share at 11% a year. This EPS growth is lower than the 20% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that’s hardly shocking given the track record of growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth

We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Fiamma Holdings Berhad’s earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

Investors should note that there’s a difference between Fiamma Holdings Berhad’s total shareholder return (TSR) and its share price change, which we’ve covered above. 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. Fiamma Holdings Berhad’s TSR of 186% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It’s nice to see that Fiamma Holdings Berhad shareholders have received a total shareholder return of 24% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 23% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Fiamma Holdings Berhad (of which 1 is significant!) you should know about.

Of course Fiamma Holdings 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.