Consumer Durables News

Signature International Berhad’s (KLSE:SIGN) three-year earnings growth trails the 55% YoY shareholder returns


The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Signature International Berhad (KLSE:SIGN) share price has flown 267% in the last three years. How nice for those who held the stock! It’s also good to see the share price up 23% over the last quarter. This could be related to the recent financial results, released recently – you can catch up on the most recent data by reading our company report.

After a strong gain in the past week, it’s worth seeing if longer term returns have been driven by improving fundamentals.

However if you’d rather see where the opportunities and risks are within SIGN’s industry, you can check out our analysis on the MY Consumer Durables industry.

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 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.

Signature International Berhad was able to grow its EPS at 108% per year over three years, sending the share price higher. The average annual share price increase of 54% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

KLSE:SIGN Earnings Per Share Growth September 2nd 2022

We know that Signature International Berhad has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Signature International Berhad stock, you should check out this FREE detailed report on its balance sheet.

What About The Total Shareholder Return (TSR)?

Investors should note that there’s a difference between Signature International 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. Signature International Berhad’s TSR of 275% for the 3 years exceeded its share price return, because it has paid dividends.

A Different Perspective

We’re pleased to report that Signature International Berhad shareholders have received a total shareholder return of 78% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 15% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 3 warning signs with Signature International Berhad (at least 2 which are concerning) , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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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