World Precision Machinery (SGX: B49) earnings growth rate below 34% CAGR provided to shareholders

It may sound bad, but the worst that can happen when you buy a stock (unleveraged) is that its market price drops to zero. But if you buy shares of a very large company, you can After than double your money. For example, the Limited Global Precision Machinery (SGX:B49) the stock price has climbed 105% over the past three years. This kind of back is as solid as granite. Last week, stocks were down 10%.

Although the stock has fallen 10% this week, it is worth focusing on the long term and seeing if historical stock returns have been driven by underlying fundamentals.

Check out our latest analysis for World Precision Machinery

To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

World Precision Machinery was able to increase its EPS by 117% annually over three years, driving the stock price higher. This EPS growth is greater than the average annual share price increase of 27%. So it seems investors have become more cautious about the company over time. We think the low P/E ratio of 9.37 also reflects the negative sentiment around the stock.

The graph below illustrates the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

SGX: B49 Earnings Per Share Growth August 3, 2022

Before buying or selling a stock, we always recommend a careful review of historical growth trends, available here.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. Arguably, TSR gives a more complete picture of the return generated by a stock. In the case of World Precision Machinery, it has a TSR of 141% over the last 3 years. This exceeds the performance of its share price that we mentioned earlier. And there’s no price guessing that dividend payouts largely explain the divergence!

A different perspective

It is good to see that World Precision Machinery has rewarded its shareholders with a total shareholder return of 9.4% over the past twelve months. This includes the dividend. However, this is lower than the 14% per year TSR it has made for shareholders, each year, over five years. The pessimistic view would be that the stock has its best days behind it, but on the other hand, the price could simply moderate while the business itself continues to operate. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we have identified 3 warning signs for World Precision Machinery (1 cannot be ignored) which you should be aware of.

But note: World Precision Machinery may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).

Please note that the market returns quoted in this article reflect the average market-weighted returns of the stocks currently trading on the SG Exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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