UOA Development Bhd (KLSE:UOADEV) jumps 5.3% this week, though earnings growth is still tracking behind one-year shareholder returns

Simply Wall St · 05/10/2024 22:34

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But not every stock you buy will perform as well as the overall market. For example, the UOA Development Bhd (KLSE:UOADEV), share price is up over the last year, but its gain of 15% trails the market return. The longer term returns are positive, with the share price up 14% in three years.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

Check out our latest analysis for UOA Development Bhd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year UOA Development Bhd grew its earnings per share (EPS) by 23%. This EPS growth is significantly higher than the 15% increase in the share price. So it seems like the market has cooled on UOA Development Bhd, despite the growth. Interesting.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
KLSE:UOADEV Earnings Per Share Growth May 10th 2024

We know that UOA Development Bhd has improved its bottom line lately, but is it going to grow revenue? Check if analysts think UOA Development Bhd will grow revenue in the future.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, UOA Development Bhd's TSR for the last 1 year was 37%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that UOA Development Bhd shareholders have received a total shareholder return of 37% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% 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. It's always interesting to track share price performance over the longer term. But to understand UOA Development Bhd better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with UOA Development Bhd (including 2 which are a bit unpleasant) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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