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Does Avi-Tech Electronics's (SGX:BKY) Share Price Gain of 79% Match Its Business Performance?

Simply Wall St

It hasn't been the best quarter for Avi-Tech Electronics Limited (SGX:BKY) shareholders, since the share price has fallen 21% in that time. But that doesn't change the fact that the returns over the last five years have been pleasing. It has returned a market beating 79% in that time.

See our latest analysis for Avi-Tech Electronics

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over half a decade, Avi-Tech Electronics managed to grow its earnings per share at 36% a year. This EPS growth is higher than the 12% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.50.

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

SGX:BKY Past and Future Earnings April 1st 2020

We know that Avi-Tech Electronics has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Avi-Tech Electronics the TSR over the last 5 years was 158%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Avi-Tech Electronics shareholders have received a total shareholder return of 31% 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 21% 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. It's always interesting to track share price performance over the longer term. But to understand Avi-Tech Electronics better, we need to consider many other factors. Even so, be aware that Avi-Tech Electronics is showing 3 warning signs in our investment analysis , you should know about...

Of course Avi-Tech Electronics 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 SG exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.