We think intelligent long term investing is the way to go. But unfortunately, some companies simply don’t succeed. To wit, the Petron Malaysia Refining & Marketing Bhd (KLSE:PETRONM) share price managed to fall 63% over five long years. That’s an unpleasant experience for long term holders.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they’ve been consistent with returns.
View our latest analysis for Petron Malaysia Refining & Marketing Bhd
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Looking back five years, both Petron Malaysia Refining & Marketing Bhd’s share price and EPS declined; the latter at a rate of 1.8% per year. This reduction in EPS is less than the 18% annual reduction in the share price. This implies that the market is more cautious about the business these days. The low P/E ratio of 3.18 further reflects this reticence.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Petron Malaysia Refining & Marketing Bhd 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 Petron Malaysia Refining & Marketing Bhd stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Petron Malaysia Refining & Marketing Bhd, it has a TSR of -58% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
We’re pleased to report that Petron Malaysia Refining & Marketing Bhd shareholders have received a total shareholder return of 5.5% over one year. Of course, that includes the dividend. That certainly beats the loss of about 10% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Even so, be aware that Petron Malaysia Refining & Marketing Bhd is showing 3 warning signs in our investment analysis , and 2 of those are concerning…
We will like Petron Malaysia Refining & Marketing Bhd better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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